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W. Robert Montgomery

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The holiday season is here: keep consumer debt low

With the financial challenges and the consumer debt that has been acquired by Americans since 2008, the number of individuals filing for bankruptcy protection has also increased. Credit card debt -- some of which is unavoidable for many families -- is one of the main reasons that individuals find themselves struggling and then needing a fresh financial start.

With the holidays around the corner, consumer spending tends to increase as individuals want to share a generous spirit with others. However, there are some things that consumers can do in order to avoid starting the New Year with a mound of debt that is outside of their financial control.

As such, it has been recommended that people have a strict budget and don't vary from that when shopping and that people be very cautious when deciding to open a new credit card account in order to save extra money due to the high interest rates they generally charge.

Debt -- specifically credit card debt -- can cause significant problems if not paid on time or paid at all. Missed or late payments have the ability to affect your credit score. If an individual has a lower credit score, they may have a more difficult time obtaining financing for large purchases in the future or even higher interest rates. Also, if the debt becomes completely unmanageable, bankruptcy protection could become a viable option. Bankruptcy may be a necessary and helpful option.

Credit cards, while providing many benefits, can also cause problems that can create bigger issues for individuals down the road. Credit cards are a double edged sword. For example, if they are managed and paid on time it will help a credit score increase; but they can also destroy a credit score. Bankruptcy helps provide individuals with the fresh start necessary to rebuild a lower credit score.

Source: WWLP, "Avoiding credit card debt this holiday," Nicole Nalepa, Nov. 15, 2012

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