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May 01, 2006
What If You Have Trouble Making Your Credit Card Payments?
It happens to the best of us. There are lots of books written about getting out of debt and there's a good reason. It's far easier to get into debt than to get out of debt. If you run into trouble making your credit card (or any type of credit) payments, you can get out. It just takes time.
Begin by calling the credit card company and explaining the problem. If you've lost your job, or become ill and are not working, tell the credit card company. If you are simply in over your head, tell the credit card company. The important thing is to tell the credit card company. They would much rather talk to you than send you nasty letters and wonder if they will ever be paid. You will probably be able to work out a repayment plan. You may even be able to negotiate with them to reduce the total amount you owe if you make a full payment.
Susie was desperate. She was laid off six months earlier and her credit cards were up to their limits. Her ex-husband hadn't given her any child support for almost a year. She didn't even know where he was. She owed $3,400 to VISA and $2,200 to MasterCard. She didn't have enough to make even the minimum monthly payment. She also owed almost $800 on two store cards, and she hadn't made her car payments in almost three months. She was just starting a new job, but didn't see any way of ever being able to catch up. I suggested she call her creditors and try to work something out. She did, and they were happy to co-operate.
One company set up a payment schedule with her. She could pay $50 a month until she was caught up provided she didn't charge any more on the card. Another agreed to accept a single payment of half of what she owed if paid immediately. She borrowed $1,100 from her mom, which took care of that problem. She called her bank and explained her position. Since she only had six months left on her loan, they agreed to refinance her loan adding the $800 she owed the stores so she could have one single payment she could work into her cash flow. Her dad co-signed the loan and she promised to get on a budget. She was on her way to recovery.
Now, not everyone has a mom or dad willing to bail her out. Susie was lucky. But the steps she took apply to just about everyone:
1. Contact your creditors and tell them what's happening.
2. Try to work out a payment plan that fits with your cash flow.
3. See if the creditor will take less if you agree to make a single repayment.
4. See if your bank will agree to give you a consolidation loan. By doing this you can save a good deal of interest.
5. Put yourself on a budget.
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