I am in a situation where I will no longer be able to pay my credit cards.?

Question

Most of my savings is gone and I make very little money (like 600 month) and will no longer be able to pay them as I need to keep every last penny for my rent and basics , which will also run short soon. I have paid my cards for the past 10 years with no issues but since losing a fairly good paying job last year (good pay because of all the years I worked there) and have a job that pays little and I have to take a cab home from work in the evenings and also don't have a regular work schedule and work different shifts every week. There is no way I can pay my cards as I would have to make 3 times as much to cover everything and that isn't going to happen for me with no education. How long is it before they can do anything to me? I am going to send them a letter letting them know I can no longer pay.

I am middle aged and do have a dependent child too.

I don't own a home or land or a car. Most of the stuff I bought with the cards is long gone when I lost everything I had a while back.

Answer 1

First things first and that isn’t paying off the credit cards. $600/month puts you WAY below the federal poverty level. You and your child need to get to where you can afford food, clothing, shelter, transportation and utilities. If that means talking to a relative or somebody at a church to stay on a temporary basis, fine.

If you are like me, you and your child probably have this addiction to food. I suggest you talk to your current employer and explain this fact to him and that if he doesn’t put you on a more regular schedule you will be inclined to look for work elsewhere. Additionally, you might want to see if there is any work you can do when you are not on the schedule. Like pet sitting or house cleaning.

After you have steady income I suggest you start saving for an emergency fund. This is for EMERGENCIES ONLY! A new dress or the latest new shoes for the little one is not an emergency. Put it in a place where you will actually have to break the glass to get to it. I suggest saving $1000. CASH! I don’t know how old your child is, but I am guessing he or she will get sick. That’s what happens when you have kids. When they do, you will need that money to pay for medicine.

At this time I suggest you start a budget. You look at what you are bringing home. You figure what you will need for food, clothing, shelter, transportation and utilities. You save for your emergency fund.

During this time, you are not paying on credit cards. You are doing you best just to provide an existence for you and your child. Chances are you will fall behind on your CC bills. You might get calls from collectors wondering when you will be paying them. More often than not, they will more than likely say nasty things about you, your family and anyone else. I suggest you read the Fair Debt Collection Practices Act to know your rights. If they start abusing you over the phone, hang up on them. Just remember they are not your friends.

Now, after you have your basic needs taken care of, you have steady income, a budget and $1000 cold hard cash emergency fund in place. You can start to do one of two things. You could first, maybe start saving and looking for a place to live. Or, if your host doesn’t mind you staying, start paying off your debt using the debt snowball. This means listing all your debts from smallest to largest and paying them off one by one. Some will say pay off the one with the highest APR% to save money in the long run. They are right BUT we are looking for emotional wins more than saving money in the long run. And if you have to dip into your emergency fund, replenish it first before going back to paying your CC bills.

You sound desperate so my advice has been very direct. If I have offended, I apologize. However, when I read your question, I got the feeling you were real need.

You might be asking, “What about my credit rating?” In your situation, credit score is not something to be concerned about. If you try for an apartment, yes they look at credit scores. But there are other ways to work it out. Showing your budget history from the past months, first & last months rent and your job history to the manager might convince him to overlook your credit score.

Do NOT consolidate debt. They trash your credit score as if you filed bankruptcy. And, if you lose your job, you are responsible for everything once again. All that money you paid to them will be gone. It happened to me.

Do NOT take out another loan. You can’t get out of a hold by digging deeper. It is up to you to take control of the situation and stop the lending.

Do NOT use any more credit cards. Your emergency fund will help you. CCs carry interest rates and compounded over time you spend way more money than they are worth.

Do NOT declare bankruptcy. First, it cost me $1200 for a lawyer. And, right now it sounds like cash is in short supply. Second, it is a gut wrenching process to go through. Showing up in court is no fun.

Finally, seek financial advice. There are broke financial advisors and successful ones. Make sure to do your research.

I hope this advice helps. Take care and good luck.

Answer 2

If you have a place to live, which doesn't require a credit check, and you will not need a car within the next year or so....then just write them the letter. I would personally go to a credit counseling service maybe next year if you get an increase in pay or something...they combine all of your debt and usually get the credit card companies to cut all of the interest and fees, and then you make one low payment per month to pay it off. It's free and you can get out debt. Or I just waited for my tax return..I am a single mother, and the return was nice! Then I paid off my cards. They usually settled for a lower amount if I told them I didn't have the full balance...they will make a deal with you. Good Luck!

Answer 3

Try talking to your credit card holders. If you have not had a problem and you have been a soli member for that long you should be able to set up a payment play for very little every month and close the credit accounts. Most companies should work with you as long as you continue to make payments, and close the cards. Otherwise talk to your bank to see if they can give you a personal loan for very little a month, they should understand that jobs can and will change. Good luck to you!

Answer 4

How much credit card debt do you have?

My advice to you is to contact whatever bank you have your credit card through. Explain to them your situation and if you have a good history with them, they may work out a minimum monthly payment that will work for you and for them.

You can also contact a credit counseling or a debt consolidation service. They can generally take all your monthly payments and combine them so that you are making one lower payment.

It really doesn't matter if you send them a letter stating that you can not pay. It is YOUR debt and you will be required to pay it. Most credit card companies just want to get their money, and will usually work with you on a settlement that you can handle. If worse comes to worse, cancel your cards and send them $5 - $10 a month. It won't cover your interest rate, however they can not legally pursue you for the entire amount of the debt if you can prove that you are attempting to make payments.

If you don't do anything, they will report your refusal to pay to the credit bureau and collection agencies will HOUND you. They may or may not take you to court ... it depends on who the credit card is through. I wish you the best of luck!

Answer 5

Have you tried a credit counseling service? Sometimes they can really help lower payments. If that doesn't work, you might try getting a part time job close to home. Personally, I WOULD NOT send them a letter telling them anything. At least not yet. Play all of the cards in your hand first. Wish you luck

Answer 6

I was in the same boat 5 years ago when I lost my job. My perfectly good credit went out the window, but you know what, those bastards have not gotten a single penny from me, YET anyways.
The CC banks will call and harass you, so it will be good to have caller ID and just ignore them. It will take at least several months before they MIGHT sue you depending on whether your balances are large enough to make it worth sueing for. If they sue you and win a judgement, they may or may not garnish your wages or seize assets depending on what state you live in. If you don't owe much, the CC banks/collection agencies may not even bother to sue. They will just screw over your credit report for 7 years and maybe continue to harass you or offer settlements for less than the total amount owed.

Answer 7

Check out http://www.daveramsey.com

People in situations like yours call into his radio show all of the time. There is hope. You are NOT bankrupt, do not even think about filing for that.

He has an awsome book called "The Total Money Makeover."

I want to point out a few important pages to argue against some of the other advice you have received to this question.

The Truth About Bankruptcy:
http://www.daveramsey.com/the_truth_about/bankruptcy_3018.html.cfm

The Truth About Debt Consolidation:
http://www.daveramsey.com/the_truth_about/debt_consolidation_3035.html.cfm

The Truth About Debt Reduction:
http://www.daveramsey.com/the_truth_about/debt_reduction_3606.html.cfm

The Truth About Debt Management:
http://www.daveramsey.com/the_truth_about/debt_management_3020.html.cfm

The Truth About Debt Help:
http://www.daveramsey.com/the_truth_about/debt_help_3034.html.cfm

Please, do yourself a favor and cut up or freeze those credit cards. Do not file for bankruptcy. Do not go to debt management because underwriters treat that the same as Chapter 13 bankruptcy. There is hope. You just have to plan and attack your debt.

Answer 8

You can try to get a loan to consolidate the cards but if you cant pay nothing that might not work for you either they are going to write it off as bad debt then send it to an collection agency. Looking into bankruptcy may be your best option, you can go to a bankruptcy lawyer or try one of those do it yourself kit I think there may even be a website that help you file its cheaper than a lawyer and not as complicated as the do it yourself kits good luck

Answer 9

your best bet is to contact the credit card co. and explain the situation and ask if they can help with a more flexible payment schedule otherwise you may face bankruptcy. hopefully you can find a better paying job soon. You don't necessarilly need higher education to get a good job. good luck

Answer 10

In your case, I think it would be best to file for bankruptcy.