What to do When You Can’t Pay Your Credit Card Bills

Do you try and avoid the mail when the credit card bills are due? Do you leave them unopened hoping they will disappear? Do you keep paying and paying and watching the balances go higher and higher? There are solutions to your credit card debts.

Credit Card Solution #1: Consolidation Loan

Especially if the interest rate is high on your credit card bills, talk to your banker about a consolidation loan. You may have to give up the credit cards, but if the banker will put all the debts into one loan with a principle and interest payment you can afford, you will be able to pay off the debts over a reasonable amount of time. Whether or not you qualify for a consolidation loan will depend on your income and how much is being paid to all your debts including your car payments and mortgage payments.

Credit Card Solution #2: Structured Payments

If you are able to pay more than the minimum, you may be able to pay your debts in full. Most people when they look at paying credit card bills, they want to pay the one with the highest interest rate first. Their second choice is to pay the largest one first. The belief is, that once it is paid, I will be able to handle the rest of my debts. If that debt is $10,000 and all you have to pay to principle after all the minimum payments are made is $200, it will take you 50 months or over four years to pay that debt. If you start with the smallest debt and when it is paid in full, the principle and interest from the smallest debt becomes the principle payment on the second, then principle and interest payment on the second become the principle payment on the third until all the debts are paid in full.

Credit Card Solution #3: Consumer Proposal

If you cannot pay more than the minimum, or if your debts have gone to collections and you will not be able to pay them in full within the next five years, you may want to consider a consumer proposal. It is a binding agreement between you and your creditors where the creditors accept a partial payment as payment in full. Because it is court approved (you do not have to attend), the decision of the majority of creditors is binding on all the creditors. It may run for a maximum of five years and will affect your credit rating for the time it takes you to pay the consumer proposal in full plus three years. Debts in collection put your rating at the bottom and they remain on the credit bureau for the time it takes to pay the debt in full plus three years, so a consumer proposal is an improvement on that.

Credit Card Solution #4: Personal Bankruptcy

If you are unable to use any of the other solutions, a personal bankruptcy will get rid of your credit card debt. People may feel uneasy about bankruptcy because of the perceived stigma attached to it. However, it is a legal method of getting rid of your debt which you would otherwise never be able to get rid of. Often circumstances have caused you to be in this poor financial position and you should not be under that stress for the rest of your life.

Make an appointment for a free consultation with a Consumer Proposal Administrator today to discuss your options.


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