Holiday Shopping On a Budget: Avoiding The Pitfalls Of Credit Card Debt

A little bit of debt isn’t necessarily considered a bad thing in the United States, but this rarely applies to credit card debt. Credit cards have high interest rates, steep penalties, and nonpayment can affect one’s credit score almost immediately. At the same time, credit card spending can accrue benefits and build a healthy credit history when done wisely. With the holidays just around the corner, you may have several purchases you plan to make with credit cards, whether they are ones you already have or those for which you intend to apply. If that potential credit card debt would be just a fraction of a larger debt situation, you might already be thinking about filing for bankruptcy. Bankruptcy can clear a wide variety of debts, giving the debtor an opportunity to rebuild from a fresh slate. But it can raise special concerns for a debtor who relies upon credit cards during the holiday season. Read on to learn more about these issues and more. For your free consultation with an experienced Las Vegas bankruptcy lawyer, call 702-370-0155. 

Tips For a Holiday On a Budget

• Buy presents in time to take advantage of free shipping. These days, the cost of shipping- especially rush shipping- can be higher than the gift itself. If you haven’t already taken advantage of Black Friday and Cyber Monday deals, start your shopping now to avoid inflated shipping fees closer to the holiday. 

• Consider homemade gifts and decorations. Most of us already have too much stuff that was mass-produced and shipped from a faraway country. For the right recipient, a homemade gift means so much more than one purchased from a store. 

• Volunteer on the holiday. Hosting a holiday gathering can be highly expensive, especially if you are the one responsible for supplying the bird and the booze. But you can save money and give back to your community if you volunteer with a charitable organization on the holiday. 

• Try a gift exchange rather than individualized gift shopping. Setting up a Secret Santa or White Elephant gift exchange isn’t just a fun way to celebrate a holiday. It also saves participants money by reducing the number of people for which they have to shop. You can also set a limit on how much participants should spend on gifts. 

• Don’t forget to budget for miscellaneous expenses. Figuring out what you want to spend on gifts, and even groceries, can be easier than figuring out what you will spend on what you don’t already know that you need. For example, you might need firewood, a lighter, a bag of ice, and a few other supplies for hosting and leave the store spending triple digits. Try to think ahead as much as possible now to gather those items in advance, ideally at a better deal. 

• Find as many free holiday activities as possible. Some of the best Christmas memories are made without spending a dime. Whether that’s checking out neighborhood Christmas lights, local parades, or holiday markets, there are plenty of activities this season that come at little to no cost. Many guests will also enjoy outdoor and physical activities to help offset excessive holiday calories. 

What Are The Consequences Of Credit Card Debt? 

Despite one’s best efforts, it’s still extremely easy to fall into credit card debt during the holiday season. In a few months’ time, you may be feeling the aftereffects of excessive holiday spending. Some of the consequences that can arise from mismanaged credit card debt include:

• Poor credit: Having a healthy revolving credit balance available is part of maintaining a decent credit score. Defaulting on one or more credit cards can hurt your credit score and be viewed poorly by banks and other financial institutions. Even if you do qualify for financing, it may come with higher interest rates and other negative ramifications. 
• Lawsuit: This starts as the receipt of a summons for a lawsuit filed by one of your creditors. This summons gives you a deadline to provide any arguments opposing your creditor’s claims. Failure to respond by that deadline can result in a default judgment against you. Having a lawsuit judgment on your credit is a black mark that can hurt your score and chances of success in future financial applications. Filing for bankruptcy can stop most types of lawsuits, but will not stop an eviction that is in the writ of possession stage. 
• Wage garnishment: Most creditors will make at least some attempts to collect after obtaining a judgment against a debtor. One of their favorite methods of doing so is a wage garnishment. After obtaining a lawsuit judgment, a creditor can request a writ of garnishment from the court. This will be sent to the debtor’s employer, who is then required by law to withhold a portion of their wages and remit them to the creditor until the balance is paid in full. The amount that a creditor can garnish depends on the type of debt. Some debts are capped at 15%, and others at 25%, but the limits for back child support are much higher. Filing for bankruptcy stops most types of wage garnishments, but only a fully-paid chapter 13 filing will stop a child support wage garnishment. If you’re facing wage garnishment, it’s important to consult with wage garnishment lawyers to understand your options and protect your rights.
• Bank account levy: This can be a concern if you have a credit card through your bank. If you fall into arrears on credit card debt, your bank account could be drained to pay the difference. Your bank won’t care which expenses you need to pay with funds taken through an account levy. 
• Credit card spending limits in bankruptcy: Both chapter 7 and chapter 13 bankruptcy can be used to wipe out unsecured debts like unpaid credit cards. But there have to be limits to this, or many bankruptcy debtors would open up as many credit cards as possible, max them out, and discharge them in bankruptcy. This is not bankruptcy’s intended purpose. Therefore, debtors are limited on how much they can spend on luxury, or non-essential, items and cash advances in the months before declaring bankruptcy. Exceeding those limits could result in those debts remaining after discharge, or more serious consequences in severe situations. To navigate these rules, it’s crucial to consult with a chapter 7 bankruptcy lawyer for guidance on your specific case.

Plan Your Las Vegas Bankruptcy Filing Around this Year’s Holiday Season with Our Experienced Legal Team

If credit card debt is one of your biggest concerns and you are considering bankruptcy, you may be in a position to wait after to file until after the holiday. This allows you to retain your credit cards for holiday shopping, as they are lost upon filing a bankruptcy petition. But if you are facing an imminent collection effort by one of your creditors, you may not have that long to wait before filing your case. Our Las Vegas bankruptcy team can help you weigh the benefits and advantages of filing for bankruptcy, as well as doing so now or planning a filing later in the future. Discuss your situation in greater detail with an experienced member of our firm. Call 702-370-0155 to schedule your free consultation today.

Las Vegas Bankruptcy Lawyers

LAS VEGAS
7251 W Lake Mead BLVD #300
Las Vegas, NV89128
Office: 702-879-2499
Email: [email protected]

HENDERSON
1489 W Warm Springs Rd. Ste 110
Henderson, NV 89014
Email: [email protected]

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