RINGING IN HOLIDAYS IN THE HOLE : ARCADIA MAN'S DEBT POINTS TO NATION'S TROUBLE WITH CREDIT.

Byline: Keith Stone Daily News Staff Writer

Declan Thomas' wallet just got a lot thinner, but not because he's spending wads of cash on Christmas presents.

No, Thomas finally surrendered last week and cut up the rest of his inch-thick collection of 25 credit cards and charge cards.

That was the easy part.

Now he must repay $50,000 that he says he owes on 13 credit cards. It's a painful end to a seven-year spending odyssey that 26-year-old Thomas fueled through easy credit and delusions of repayment.

``Even up until yesterday, I still was thinking something is going to happen where I will get the money,'' the Arcadia man said during a break last week from his sales job at Circuit City, where he owes $3,000.

Now he knows better. His hard-won holiday message: ``If you can't pay for it in cash, you can't afford it.''

Yet millions of Americans are rushing headlong into this holiday season under the shadow of $456.4 billion of debt - an increase of some 10 percent from last year, according to Bankcard Holders of America.

Daunting, perhaps, but that hasn't stopped stores from ringing up what promises to be a lucrative year.

Sales on the Friday after Thanksgiving, traditionally the first day of the holiday shopping season, were up by 11 percent in malls nationwide, according to the International Council of Shopping Centers.

MasterCard says the typical American plans to spend $765 on gifts, but only 47 percent have set a shopping budget and 28 percent say they won't follow it.

It is the making of a huge holiday hangover. When the bills come due in a month or two, credit counselors expect to see lines of charge-happy people who have spent themselves into a corner.

At the Consumer Credit Counseling Service of Los Angeles, the typical person in need of help owes $15,000 on 10 credit cards.

``Many times it's Christmas that is the straw that breaks the camel's back,'' said Gary Stroth, executive director of Consumer Credit Counseling. ``Maybe they shouldn't have spent anything for Christmas.''

Thomas' friends and family shouldn't expect to find any gifts from him under their yule trees.

``Everyone is getting a card this year. I was so far in debt last year and the year before that everyone got a card then, too,'' he said.

And Thomas' gift to himself? A visit to a credit counselor.

He is one of about 30,000 families and individuals this year in Los Angeles County who will turn to Credit Counseling, an increase of 25 percent over last year.

Trapped by monthly minimum payments of $2,000 and jangled by collectors calling his home at all hours, Thomas relented finally and sought help.

Credit Counseling convinced some of his creditors to forgo interest payments so that he could pay off his debt within four years, with monthly payments of $1,000.

Thomas is resolute about paying his bills.

``I refuse to file for bankruptcy,'' he said, his voice rising. ``My mom brought me up to feel that that would be stealing from somebody. It was my fault.''

Not everyone has the moral fortitude or economic resilience to dig themselves out from under such a deep financial avalanche.

California has the seventh-highest bankruptcy rate in the nation, according to one study.

U.S. Bankruptcy Courts between San Luis Obispo and Orange County report another record year, providing debt relief to more than 85,000 people - an increase of nearly 25 percent.

In the San Fernando Valley alone, the number of bankruptcies has skyrocketed to 12,664 so far this year, a rise of nearly 49 percent.

The reasons for these dramatic rises in bankruptcy filings are myriad, extending beyond the dip in employment and the economy in general.

Bankruptcy Court Judge Geraldine Mund said her research on the matter found that at least some of the rise is due to a change in the so-called American Dream. Years ago, reaching that dream meant owning a car, house and a few appliances, all of which were bought once and lasted for years, she said.

``The demand for stuff, if you want to call it that, has increased, and the stuff has a lower life span, or you keep paying for it every month,'' Mund said.

But as the dream has changed, so has the need to spend, spend and spend more. And driving this explosion of spending, Mund said, is both the ease in which people can obtain credit and the seduction of what begins as a relatively low monthly payment.

People also don't always fully understand the terms of their cards, not realizing that introductory interest rates are just that - introductory.

``They have been making these minimum payments on three, four and five credit cards, and suddenly it hits them - they owe more than they make in a whole year,'' Mund said.

That was the case for Thomas.

``Right out of high school,'' he said, ``I went to Texas to go to the University of Houston. I got my first credit card, with a $700 limit. No big deal.''

``I used it a lot and paid it off every month. Well, that is a problem because people start sending you credit cards by the dozen. So then I just started applying for credit cards,'' Thomas recalled.

The more cards he collected, the more debt he collected.

``I ended up with a $30,000 boat, a $30,000 truck, all at the same time,'' he said. ``The idea was: It didn't matter, as long as I could make the minimum payment. I never looked at the total amount. But over the years it adds up.''

When his minimum payment hit $2,000, he said he stopped sending checks.

``They knew what I was making, and they still gave me just amazing amounts of money - way more than I could pay off,'' he said.

A Wall Street stock brokerage firm studying the risks of investing in lenders theorizes that the issuance of too much credit with too little control has led to a dramatic rise in bankruptcies.

``Some card holders accumulated 10-20 cards, ran them up to the limit and then had no choice but to seek bankruptcy,'' according to the study by Gerard Klauer Mattison & Co.

``We believe bankruptcies are escalating in 1995-1996 because of heavy 1994-1995 credit card mailings which are only now showing up with a lag as loan losses,'' the study says.

Visa U.S.A. disputes that bank cards play such a major role in bankruptcies.

``Bank cards represent only 7 percent of the total consumer debt,'' said Kenneth Crone, senior vice president for issuer risk at Visa. And only about 1 percent of bank-card accounts end up in bankruptcy, he said.

Visa's own analysis of filings found that most people filed simply because they were overextended. The study, published in July, urged the establishment of programs to discourage people from filing for bankruptcy ``or to exclude or reaffirm their credit card debt after they've filed.''

Also, ``reinstatement of credit card privileges would provide an attractive incentive for filers who agree to reaffirm their credit card debt,'' the study says.

Even though Thomas is $50,000 in debt, that has not stopped credit card issuers from filling his mailbox with applications for credit.

So far he has resisted, but he knows eventually he will need another card.

``You can't live in this day and age without a credit card,'' he said.

CREDIT TIPS

Even with less than 10 shopping days left until Christmas, there still is plenty of time to save yourself from the heartbreak of too many bills and not enough money. Credit counselors recommend that shoppers should:

Buy gifts with cash or cards that automatically deduct the amount from your bank account.

Charge only what you can afford to pay in cash now, without assuming the purchase can be paid with future earnings.

Make a holiday spending plan and stick to it. Include the cost of wrapping, shipping and other hidden expenses.

Pay off credit cards immediately to save the cost of finance charges. Use one card for the bulk of your purchases, and use another card for debts you intend to pay off gradually.

Think about gifts that require no purchase, such as holiday cards and baked goods.

?13Source: Consumer Credit Services of Los Angeles, Bankcard Holders of America

CAPTION(S):

3 Photos, Box

Photo: (1--color) Declan Thomas only recently cut up his credit cards after charging up $50,000.

(2--color) Thousands of files fill the Woodland Hills U.S. Bankruptcy Court. Bankruptcies rose nearly 49 percent in '96 in the San Fernando Valley.

(3--color) People line up at the Woodland Hills U.S. Bankruptcy Court.

David R. Crane/Daily News

Box: CREDIT TIPS (see text)