If You Can't Pay Your Credit Cards...
There's no argument that credit cards can be a great convenience in modern life, making online shopping possible and removing the need to carry cash in many situations. Unfortunately, there's likewise no doubt that if not used carefully, they can lead to all sorts of financial trouble.
In the days when credit was cheap and easy, many people ran up large debts as the economic boom roared on, but now in tighter times millions of people are having to come to terms with the consequences, and are facing up to large credit card debts that can be very difficult to handle. Indeed, for many people, there comes a time when keeping up with credit card payments is simply impossible. What will happen in this situation?
Don't Try to Hide
As painful and stressful as it is to be suffering from financial problems, you can be sure of one thing - your worries will not go away if you just ignore them. To have any chance of solving your problems, you need to be proactive in dealing with them.
To start with, contact the card companies telling them that you are no longer able to keep up the repayments, explaining any reasons such as redundancy or other drop in income, or simply the cost of living being too high. Ask them if you can come to an arrangement to repay over time at a level you can afford. While it's not strictly recommended to break your credit agreement on purpose, you might find that the card issuer is more likely to come to an arrangement with you if your account is already in arrears and it's obvious that your money difficulties are real.
Income and Expenses
The next step is likely to be the credit card company asking you to fill out a form detailing all your income and expenses, showing how much disposable income you have each month, along with details of all your other debts. This will need to be done for every debt you have.
Make a Repayment Offer
Once you've determined how much you can afford to pay each month, split this amount between your various debts in proportion to how large the debt is. Return your completed forms to the card issuers along with a letter offering to repay this amount every month in return for interest and charges to be frozen, your account spending stopped, and collection proceedings to be halted. If your offer is realistic, it is likely to be accepted by the card company, and so long as you keep to the promised amount the stress of dealing with credit card debts will be a thing of the past.
If this sounds too easy a way out, you won't be surprised to hear that there's a downside as well: by doing this process you will be breaking the terms of your original credit agreement, which will be marked on your credit file as a default, which will make obtaining finance in the future more difficult, for at least the next six years until the default drops off your record.
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