What If You Can’t Pay Your Credit Card Bill?
The current economic situation has seen thousands upon thousands of people having difficulty in meeting their debt repayments. Credit cards debts especially are presenting problems for many, as despite the lowering of interest rates in other areas of finance, credit card APRs have remained resolutely high and in many cases have actually risen over the last year of financial turmoil.
With unemployment on the rise, or the effects of pay cuts and reduced working hours, many people are now finding that they simply can’t afford to pay their credit card bills. What should you do if you’re one of these people?
The first thing to do is not panic! Although all debt problems are serious, your personal situation is not such a big deal to the credit card companies. Consider your own debt in the light of the billions of dollars being lost worldwide by the major banks and you’ll see that what you owe isn’t really all that much in the scheme of things, and the card companies have other priorities at the moment.
Court Action and Debt Recovery
Also, you don’t need to worry unduly about such issues as court orders, bailiffs, and debt collection agencies. Even though the card issuers will make all sorts of ominous noises about what will happen if you fail to pay, they don’t want the bad publicity involved in hounding people already in financial trouble. Before any ‘serious’ collection attempts are made, such as home visits and the like, a court order will need to be obtained, and if you’re a victim of the recession then the judge is likely to look on your case sympathetically. Because of this, court action is rarer than many people imagine, as it’s expensive and not always effective.
Contact Your Credit Card Issuer
That being said, ignoring the situation isn’t an option. Contact your card issuer, laying out your situation, and make an offer of payment at a level you can afford. Even if this amount is tiny, it at least shows you are willing to address the situation, which will further reduce the risk of court action.
Do this in writing, both so that you have a written record of all communication, but also as it’s easier to keep calm in writing than over the phone, as there’s less pressure.
Is Your Credit Agreement Enforceable?
You could also try asking for a copy of your original credit agreement to see whether it’s enforceable by the courts. If it isn’t, then you may be able to legally walk away from the debt, although this isn’t perhaps the magic solution that many claim it to be.
Freeze Interest and Charges
Also, ask that your interest payments and any charges be frozen, so that a bad situation doesn’t get any worse. A debt charity such a Citizens Advice can be of great help in this area, helping you to secure a better arrangement than you might be able to get on your own.
Credit File Implications
Finally, be aware that even if you agree a lower repayment with your card issuer, you will be breaking your original credit agreement, and so in most cases a default notice will be placed on your credit file, making it very difficult for you to get any credit for a period of 6 years.