By David J. Kelly, Minnesota Bankruptcy Lawyer since 1976
Around this past Thanksgiving CNBC published a report about how an alarming number of shoppers are still paying off debt from Christmas of 2016. A lot of the data in the report came from a source called NerdWallet. It seems that holiday-induced spending and debt is a growing problem. 24% admitted to overspending for the holidays of 2016. Among baby boomers, 64% went in debt to pay for Christmas. For Gen-X it was 58% and for millennials it was 40%.
When it comes to not yet having paid off the 2016 debt, the millennials led with 24%. Gen-X came in at 16% and the boomers were at 8%.
The advice offered by CNBC to help avoid going into debt over the holidays again is threefold:
- Make a good budget and stick to it.
- Keep an eye out for sales; and
- Pay debt back.
My reaction to this advice is to say to myself “well that’s easy for them to say.” Credit card debt has a way of sneaking up on a person. Not everyone is capable of paying their debt back. Many are overwhelmed and the bills that come in after Christmas can be the straw that breaks the camel’s back.
If you are looking at your holiday bills and other debts in shock, perhaps it is time to consider another alternative. Once unsecured debt totals more than half of your annual income, it is usually impossible to get it paid back. For you a Chapter 7 or Chapter 13 bankruptcy might be a good idea.