Credit counseling agencies are swamped with panicked consumers who pushed their debt to the brink this holiday season.
Take Charge America, a Valley-based, nonprofi t credit counseling agency, is experiencing its busiest time of the year as people assess the damage from holiday shopping, said Mike Sullivan, director of education.
“People really know what’s happening and they know it’s going to happen, but they can’t stop themselves,” he said. “So they’re going to charge a bunch of stuff for the holidays, and then they’re going to try to figure out how to pay for it when the bills come in January. It’s very common.”
About a third of the people who seek help at Take Charge America may need a debt-management plan, while another third just need some advice and can pay down their debt on their own, Sullivan said.
“And then about a third, we have to tell them that they can’t do it, and typically we suggest they get legal advice and we’re sure that many of them end up in bankruptcy,” he said.
If you’re not aggressively paying down debt, it continues growing, Sullivan said. Late payments prompt fees and charges, and can trigger higher interest rates.
“The first thing you need to do is stop charging,” he said. “You’re not going to get out of debt if you’re digging the hole deeper. Then you have to build a budget. You’ve got to fi gure out how you’re going to pay off that debt.”
Take Charge America offers the following five tips for eliminating holiday debt:
• Don’t put off payments. Higher interest will increase your debt, as will making only minimum payments.
• Sell gift cards for cash and use the money to make additional credit card payments. You can sell your gift cards on sites such as www.cardavenue.com.
• Don’t make it worse by adding even more purchases to your debt.
• Visit a reputable credit counselor who can help consolidate your debt and create a workable budget.
• Start saving now to prevent future holiday debt.