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Preparing for holiday debt in advance of Chapter 7 filing

The holiday season is swiftly approaching, and with it comes the inevitable "holiday hangover" of credit card debt following the festivities. Millions of Americans, both here in Kentucky and elsewhere in the nation, have a tendency to overextend their credit to pay for gifts for loved ones during the holidays. This can lead to serious debt complications when the decorations have been taken down. While Chapter 7 bankruptcy is always an option to handle serious credit issues, there are also ways for Kentucky residents to approach paying down holiday debt.

Debt repayment typically falls into one of two categories: the "snowball" or "avalanche" methods. In the snowball method, a debtor begins by paying down the smallest credit card balance first, then moving on to the next-smallest. This affords a series of "quick wins," which some people find helps to motivate them to move on to larger balances. The avalanche method favors paying down the balance with the highest interest rate first, then moving sequentially down to the lowest interest rate. 

The avalanche approach can take more time, but saves more money in the long run. The snowball method is geared toward people with smaller overall debt, hence the focus on quick wins. In either case, the result is the same: through a combination of careful budgeting and selective payments, debt can be whittled down effectively. 

Of course, in some cases, neither method will be an appropriate solution for a Kentucky household. For those struggling with overwhelming debt both before and after the holiday season, Chapter 7 bankruptcy is a viable option. Filing for bankruptcy allows the court to take a careful accounting of finances and debts, liquidating assets to pay for some while discharging others, dependent upon the individual situation. 

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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