Monday 24 April 2017

I Can't Pay My Credit Card Bills What Should I Do?

I Can't Pay My Credit Card Bills What Should I Do?

Debt is a big problem for some people. I recently got an email from one of my readers asking for help...

Reader Question

I can't pay my credit card bills what should I do? I am struggling to pay my Chase, Capital One, Aqua, and Citi credit card bills. 

If I can't pay my credit cards what will happen? What can I do if I can't pay credit cards? I was recently laid off and got another job but with less pay. I am now struggling to make these payments. Please advise me.

My Response

First of all, I am sorry that you've lost your job and had to take another one with less pay. I am glad you have a job because life would be so much harder without money coming in at all. 

I have devised a 10 step action plan that you should implement but before I share this with you I wanted to answer some of the questions you have put in your email as follows...

I Can't Pay My Credit Card Bills What Should I Do?

The first step is to contact all your creditors to let them know of your circumstances. Do not delay informing your creditors because they can and will help you. I will go into this in more detail in the 10 step action plan.

If I Can't Pay My Credit Card Bills What Will Happen?

If you stop paying your credit card bills without informing your creditors they will add fees and interest on your account and it will eventually snowball out of control. 

Eventually, the account will be closed down and sent to debt recovery agents who will demand payment from you. These debt collectors will keep adding fees and interest so it's very important to contact creditors straight away.

What Can I Do if I Can't Pay Credit Cards?

If you can't pay your creditors the minimum payment every month you should at least make a token payment of 1 dollar a month. This will show the credit card company that you do want to pay off the debt eventually.

10 Step Action Plan If You Can't Pay Credit Card Bill

If you follow this 10 step program you will overcome your debt and pave the way for a better future. Take Action now. Do not delay as things will get worse if you fail to take action.

Step 1: Call All Your Creditors

Call your creditors and say you can't make the minimum payments on your credit card. Just tell them you've had to take a cut in pay and you're struggling at the moment. 

Make a request to the credit card company to stop all interest and charges so the debt does not escalate out of control

Step 2: Fill Out Your Income and Expenses

Take a piece of paper. On one side list all your income. On the other list all your expenses.

Work out how much disposable income you have and then this is what you can use to pay your credit card company.

Putting all your income and expense on paper will help you get a handle on where the problem is.

Step 3: Reduce Your Expenses

Wherever you can you must reduce your expenses. Go through all your expenses and make some brave and painful decisions.

Try to cut as much as you can off your expenses so you can pay more to the credit card company.

Step 4: Give Financial Statement to Credit Card Companies

Once you've completed your income and expense statement submit this to the credit card companies.

The disposable income you have at the end of the month must be used to pay off the credit card debt.

Make an offer to all the credit card companies by making a proportional payment using your disposable income.

Step 5: Ask Credit Card Company to Accept the Offer

You should ask the credit card company to accept the offer.

If the credit card accepts the offer make sure you keep up with the payments. If you fail to make payments they will close the account and send it to debt recovery.

Step 6: Increase Your Pay

To get back to the position you were in you must increase your pay.

Look for ways to increase your pay in your existing job or look for another job which pays more. 

The quicker you can restore your original income the quicker you will find a solution.

Step 7: Consolidate Your Debt

You should also think about paying off all your credit card debt with a consolidation loan.

If you have good credit you can apply for a loan and pay less in interest.

You can pay off the credit cards with the loan and just stick to the one lower payment.

Debt Consolidation loans is an option you must explore because you will pay less in interest and have just one creditor.

You have to get a debt consolidation loan as soon as possible because if you miss a few payments on your credit card your credit score will go down the toilet and you will not be approved for debt consolidation. Act NOW!

Step 8: Debt Counselling

Get in touch with a debt counseling charity.

These organizations will offer better quality advice and tell your exactly what to do. 

You must involve a debt counseling charity if you have a mortgage because the last thing you want is debt collectors chasing your home.

Step 9: Don't Get Additional Credit

One temptation when you can't pay your credit card is to take out more credit.

Do not do this as this will compound your problems and you will get in deeper trouble.

Make a commitment never to get more credit until you've got a handle on this problem.

Step 10: Insurance on Credit Card

Sometimes credit cards come with payment protection insurance. 

If you did take out payment protection insurance you should make a claim on this policy.

Ask the credit card company about this because sometimes they overlook these policies and just want to get their money back.

I Can't pay My Credit Card Bill What Should I Do?

You can't have your credit card debt written off and you can't stop making payments.

The only viable solution is to follow the 10 Step Action Plan above to get a handle on the problem.

I would definitely suggest debt consolidation as this simplifies the problem.

You should also consider debt counseling especially if you have an asset like a home.

Contacting your creditors immediately goes without saying. Try working with the creditors to find a solution. Compromise is the key if you are unable to pay credit card minimum payment.

I wish you all the best.

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