When you owe money on your credit card, the people you owe must follow rules set out by law. Action can be taken against you to collect the debt but you have the chance to avoid this.
Credit cards are covered by the Consumer Credit Act (CCA). Your lender may get a county court judgment (CCJ) or use debt collection agencies if other ways to get you to pay fail.
Falling behind on credit card payments can happen to anyone. Maybe you lost your job or faced unexpected medical bills. Or perhaps your expenses simply outpaced your income for a few months. Whatever the reason not being able to pay your credit card bill can be scary and stressful. However there are steps you can take to get back on track. This article will walk you through your options if you can’t pay your credit card bill.
Communicate With Your Credit Card Company
The first thing you should do if you’re struggling to make payments is contact your credit card issuer. Let them know you’re having trouble and see if they can offer some type of hardship program or temporary payment relief.
Many major card issuers have dedicated departments to assist customers facing financial challenges. They may be able to lower your interest rate, waive late fees, allow you to skip a payment, or work out a reduced payment plan. This can provide some much-needed breathing room while you sort out your finances.
When you call, clearly explain your situation and be prepared with information like:
- Why you can’t make the minimum payment
- How much you can realistically afford to pay each month
- How long you expect to need reduced payments
The credit card company will likely ask you to submit documentation to verify your hardship like pay stubs, medical bills or proof of unemployment benefits. Cooperate fully to increase the chances they’ll work with you.
Explore Debt Management Options
If the credit card company won’t lower your rate or payments, look into programs that help consumers repay debt on better terms. Two popular options are debt management plans (DMPs) and debt settlement.
Debt Management Plans
A DMP allows you to consolidate multiple debts into one monthly payment and typically reduces interest rates. You pay into the plan each month, and the agency administrating the DMP distributes funds to your creditors.
Pros of DMPs:
- Lower interest rates, allowing you to pay off debt faster
- Consolidated payment instead of multiple bills
- Creditors may agree to waive late fees
- No impact to your credit as long as you stick to the plan
Cons:
- Monthly DMP administration fees
- Creditors aren’t required to accept proposed payments
- Can’t take on new debt while enrolled
Debt Settlement
With debt settlement, the agency negotiates directly with creditors to settle accounts for less than you owe. This usually involves stopping payments completely for several months to build up a lump sum settlement offer.
Pros:
- Settles debt for fraction of balance owed
- Stops collection calls and lawsuits during settlement period
Cons:
- Big hit to your credit score when you stop paying
- Creditors may balk at settlement offers
- Saved up settlement funds could be seized by creditors
- Possible tax implications on forgiven debt
Thoroughly research any debt relief company before signing up. Make sure to ask about all fees and know what impact the program will have on your credit.
Explore Alternatives Like Balance Transfers
Balance transfer credit cards allow you to move debt from a high-rate card to one with a lower promotional rate. This can help you save substantially on interest while you pay down the balance.
To qualify, you’ll need a decent credit score. And balance transfer fees typically range from 3-5% of the amount transferred. But if you can get a good rate and term (often 0% for 12-18 months), transferring your balance to an introductory offer card can provide temporary payment relief.
Just be sure you have a plan to pay off the entire balance by the end of the promotional period. Otherwise, interest charges may be higher than on your original card.
Think Twice Before Using 401(k) or Home Equity
When you’re in a financial bind, tapping your retirement savings or home equity may seem like an easy fix. But this should be an absolute last resort.
Cashing out a 401(k) or borrowing against your home comes with fees, penalties, and tax consequences. And it puts your long-term financial security in jeopardy. Explore every other option first before going this route.
Consider Credit Counseling
Non-profit credit counseling agencies like NFCC can provide customized advice based on your unique situation. They help create budgets, negotiate with creditors, and get you into an affordable debt repayment plan.
The initial consultation is typically free. Make sure to ask about any upfront or monthly fees for debt management services. A reputable agency like NFCC will be transparent about costs.
Watch Out For Debt Relief Scams
A stressful financial situation leaves you vulnerable to predatory schemes. Be very cautious of any company asking for large upfront fees or making unrealistic promises.
Signs of a debt relief scam:
- Requires substantial fees before settling any debts
- Pressures you to stop communicating with creditors
- Tells you to stop making at least minimum payments
- Guarantees they can make debt disappear
Check complaints, read reviews, and verify licensing before signing anything. And remember – there are many legitimate free and low-cost resources to help you through financial hardship.
Prioritize Essential Expenses
While sorting out your credit card debt, be sure to keep up with “must pay” obligations like:
- Rent/mortgage
- Auto loan if car is needed for work
- Utilities
- Insurance (health, auto, home)
- Child support
- Federal student loans
Falling behind on these critical payments can have major consequences. Live frugally and cut discretionary costs so you can cover essential bills while dedicating any extra money to credit card debt.
Take Steps To Improve Your Finances
Getting current on credit card payments solves the immediate crisis. But take time to address root causes so you can avoid future debt trouble.
- Examine spending habits and make a realistic budget
- Increase income with a side gig if possible
- Build emergency savings to handle surprise expenses
- Only charge necessities you can pay in full each month
- Explore debt consolidation loans at lower interest rates
- Get help from a housing counselor if facing foreclosure
The more you can do to stabilize your overall financial situation, the easier it will be to tackle credit card bills.
Know Your Rights and Options
Don’t let fear and embarrassment keep you from seeking help. Unpaid debts are a common issue. Creditors must follow fair debt collection rules and consumer protection laws.
You have options to resolve credit card debt at an affordable pace. Seek guidance from reputable sources. And take action before missed payments spiral out of control. Relief from heavy credit card burden is possible with the right plan and determination.
How do I pay off credit card debt?
- Start by understanding your finances: Work out your monthly budget and follow it
- Add a rainy-day fund to your budget
- Set aside an amount to repay your credit cards
- Set up another account for the money you will use to pay your debts
- Stop using your credit card. It is much harder to pay if it keeps growing
- Pay your ‘priority bills’. These include council tax and any fines you might have. Find out which bills you need to pay first
- Get free debt help if you are not sure what to do
Can you negotiate credit card debt?
You may not have to pay back all you owe. And you may be able to pay it back in stages.
Some creditors will accept a ‘full and final settlement’. This is when you pay off debts less that the total owed. You will need to have the money so you can pay quickly. And you should offer equal amounts to all the people you owe, to be fair to everyone.
We can help you settle your debts? Find out more about our debt settlement service.
I Can’t Pay My Credit Card Bills
FAQ
What happens if I can’t pay my credit card bill?
They will close your account and tell the credit bureaus about the late payment if you don’t make the payment by a certain date. This period may vary from one credit card provider to another. It’s likely that this will hurt your credit score, making it harder for you to get loans in the future.
What if I can’t afford my credit card payments anymore?
If you think you won’t be able to make the minimum payment on your credit card, call your credit card company right away. Many credit card companies may be willing to help if you’re facing a financial emergency. You do not need to be behind on your payments to ask for help!.
Can a credit card company take you to court?
Yes, credit card companies can take you to court. Most of the time, though, they’ll just sell a late debt to a collection agency for a small fee and let the agency handle the court system.
What if I can’t pay my credit card bill?
If you can’t pay your credit card bill, it’s important to act right away. Contact your credit card company immediately. If you have to pay for something quickly, many credit card companies will work with you to change your payment plan. What steps can I take to manage my credit card bills?.
What happens if you don’t pay your credit card payments?
Missing credit card payments is a big problem, whether you’re having a short-term cash flow problem or a big problem like losing your job. Late payments can result in fees, penalty interest rates, account closure and damage to your credit. If you can’t pay your credit card bills, do something right away. You might be able to get things under control.
What if I can’t pay my monthly bill?
If your monthly bill is too much for you to pay, the Consumer Financial Protection Bureau says you can handle your debt in five easy steps. Determine how much money you have after subtracting expenses from income. The higher your credit card balance, the higher the monthly payment.
How do I get my credit card bills under control?
Here are a few steps you can take to get your credit card bills under control. 1. Add up your income and expenses Look for ways to cut costs. If you can’t find enough to pay your minimum payment, decide how much you can afford to pay.
What if I’m struggling to pay my credit card each month?
If you can’t pay your credit card bill every month, call the company that mailed you the card. Following that, check to see if you can get help paying other bills and ask for advice on the best ways to start making things better.
What if I can’t pay my credit card balance?
There are things you can do besides debt consolidation or debt relief if you can’t pay off your credit card balance. Americans have a record amount of credit card debt—over $1 trillion—with an average credit card APR of over 20%. All of this has made it difficult to meet ends.
