Your Options when you Simply Can’t Afford your Credit Card Payments
During these difficult financial times many individuals across the country are struggling to pay their credit card bills. With rising interest rates and tighter credit restrictions, many of us have found ourselves caught in a serious situation where our income simply can’t be stretched any farther.
Combine that with job losses and layoffs, and it becomes quite clear why so many Americans are struggling to make their credit card payments.
If you simply can’t afford your credit card payments, know that you do have options:
- Contact your lenders and explain your situation. If you recently lost your job or were laid off you can always request that your lender waive your fees, lower your monthly payment or set up some kind of payment plan that will allow you to better manage your debt. Persistence is key when it comes to negotiating new terms with your credit card company. Ask questions and demand to talk to a manager or supervisor if you are having no luck working out alternate arrangements.
- Consider debt forgiveness. If you have no means of paying your entire debt, you can often negotiate debt forgiveness. Debt forgiveness involves paying off your credit card for less than you owe. For example, if your credit card debt is $10,000, your credit card company may forgive half of your debt, thereby allowing you to pay off just $5,000 of that debt. However, it is important to understand that the debt forgiven will be reported to the IRS as taxable income. In other words, that $5,000 worth of forgiven debt will be taxed come tax time.
- Consider debt consolidation. If your credit is still strong, and you recognize impending trouble, you may be able to consolidate your credit card debt into one, easily manageable monthly payment. You may be able to consolidate onto another credit card, or take out a personal loan to accomplish this. Reconsider using your home’s equity to consolidate this debt, though, as your inability to repay your loan could cost you your home.
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