Published on March 6th, 2015 | by FinanceLoophole3
Can’t Pay Credit Card Bills
Problems With Credit Card Debt
Your monthly credit card bill lands on your door mat and you get a sinking feeling in the pit of your stomach because you know that your bank account does not have enough money in it and you can’t pay credit card bills.
Many of us have been in this very unpleasant situation and it’s not a nice experience. The most obvious thought that runs through your mind is probably going to be “What happens if I don’t pay my credit cards?“
What happens if I can’t pay credit card bills?
Your credit card company cannot make you pay more than you can afford to pay, and they cannot send you to prison unless you’ve run the debt up to a ridiculous level or acted fraudulently. Owing money isn’t a crime – So none of the police, criminal process, criminal courts or prison apply for missing payments on a credit card. However there are other consequences of late payments you will wish to avoid…
The Credit Card company want to get their money back and they will go to extraordinary lengths to get it – depending on the amount you owe them. Generally, if you don’t pay and don’t get in touch with the credit card company, they’ll pass the debt onto a debt collector. This could be the credit card company’s own internal department or could be an external debt collection agency.
The debt collection agency will repeat the process of trying to get you to pay the money. They can be very difficult and tricky to deal with – but they are not allowed to harass you, however the behavior of some debt collection agencies often borders on bullying.
If you still won’t or can’t pay, the debt collectors can apply to the County Court for judgement (CCJ) against you. This can require you to pay all of the debt you owe immediately in one payment, if you do have the money, or to pay by installments if you don’t have the money. Before the case goes to the County Court, you are required to fill in a form which provides details of your income and expenditure to the court. With this the Court can evaluate whether it is reasonable for you to pay the full amount immediately or by installments. You can also apply to pay the debt by installments, but the lender must agree to this. This is called an Individual Voluntary Arrangement or IVA. If the CCJ is awarded against you, it will stay on your credit record for 6 years so you’re unlikely to get a loan, a credit card or a mortgage in that period so don’t think it will go away – get help before it becomes a big issue. If you are having problems paying your credit card bill we can help you – just fill in this form with your details and we will get back to you.
Struggling To Make Credit Card Payments – What Can I Do?
If you are struggling to pay your credit card bills, the first thing you should do is contact your credit card company. Inform them of your problem in paying them back as soon as you can. It’s perfectly possible they might agree to let you pay your credit card debt off at a reduced amount for a little while. Also make sure that you ask for them that your interest is frozen on your debt so that your credit card debt does not keep on increasing. It is not a good idea to increase your credit limit at this point though this may be offered to you, as this is likely to get you into even more debt, though it may seem like the easy option to start with – it won’t feel like such a good decision in a little while as you debt increases.
If you have other debts or you have had a change in your personal financial circumstances which means you are not able to pay, an adviser at the debt-plus portal will be more than willing to help you – see if you qualify for help get help now see if they can write off up to 80% of you debt.
Failing that – there are a number of local debt support groups who can help you to sort out your problems. Always remember that you are not the only one that has got into credit card debt.
Complaining About Your Credit Card Provider
If you are not happy with the treatment you have had from your credit card company – you should complain to the credit card company first to give them a chance to put things right. If you are still not happy, you can make a further complaint to the Financial Ombudsman Service (see bottom of page for more info on this).
Credit Cards And Your Credit Rating
If you apply for too many credit cards or regularly switch between credit cards it can have a negative impact on your credit rating. Each time you make an application it gets recorded on your credit file and if the application is refused it will also show on the credit file. Then when a new card or other loan provider checks your credit file, it can look like you have lots of cards already or that no-one else wants to lend to you. So if you have credit card debt don’t just go off and try and get another card to pay it off – this works for a short while but will eventually have a negative impact on your credit rating score which could eventually prevent you from getting any credit. It may prevent you getting a loan for car, mortgage or transferring your mortgage onto a better loan rate if you already own your own property.
My Credit Card Debts Are Out Of Control. What Can I Do?
If you are in debt on your credit card or cards, do not panic – we can help you. It is however important that you do something – don’t put your head in the sand and hope it goes away. It won’t and chances are it will get much worse, your problem won’t just go away. Do not ignore calls or letters from anyone you owe money to (these are you creditors). Contact them and explain why you are having problems. Most organisations will be more helpful and supportive of your situation if you approach them first rather them waiting until they are threatening you with debt collection.
- Find the telephone number of your credit card company and give them a call.
- When you get a customer support agent on the phone, inform them that an unexpected event/situation has occurred which has made it impossible for you to make the minimum credit card debt repayment on time this month. If this is the first time that this has happened to you make sure you tell the agent this.
- Let them know when you will be able to make the payment – tell them the regular payment intervals you are able to offer, that is, whether you can pay monthly or weekly
- Ask if they will allow you to change your payment due date just this one time and if they would be able to waive your late payment fee. It is fairly common practice to drop the credit card late payment fee on request as long as you are not an habitual late payer.
- Always ask to freeze interest. Unless they freeze interest, your debt will carry on growing even if you are making regular payments
- Always mention any changes that you know are going to happen which will affect your ability to pay or the amount you are offering.
If these steps do the trick then make sure you make the payments on time on the new due date. If you think you will be unable to make this new repayment schedule then you may want to get a repayment plan set up – help me now – But don’t delay.
If you miss your repayment schedule – or pay less than your minimum payment (which is classed as a missed payment) you will be charged a late payment fee. This amount varies depending on who you have your card with – but this is currently charged at about £12 for each time you don’t pay on or before the scheduled payment date. Do this once and they may repay you if you ask nicely – keep doing it and they certainly won’t. This late payment fee will be added to your bill/debt so it will be making your debt more difficult to pay off each time you miss the payment date. However this is not the worst part of a late payment. Not only will you be charged a late payment fee, but you will probably also get a defaulted credit payment note in your credit history and more than likely your interest rate on your debt will go up if you keep defaulting.
Will One Missed Credit Card Payment Affect My Credit Score?
This will depend entirely on your credit card company. They have the right to report a late payment to credit rating agencies (Equifax, Experian) after 30 days. The credit bureaus maintain your credit report and compile your credit score. This score and associated credit history will be used by lenders to determine whether to let you borrow money from them – and at what interest rate you can borrow it at. You can check your existing credit score by using the links at the bottom of this page.
If you have a consistent string of late payments then it is much more likely that your credit card company will report you to the credit rating agencies. Once you go over the 90 days late limit you will be reported to the credit rating agencies and it will end up on your credit history.
Make Sure You Prioritise Your Bill Payments
Whatever you choose to do – The first thing you need to do is make a list of all your creditors (those you owe money too), and work out which ones are the priority debts. You need to make priority debts – those that could have a serious consequences if they remain unpaid. For example, if you do not pay your rent or mortgage could result in leaving you homeless and without a roof over your head, or not paying your gas or electricity bill could leave you being cut off and taken to court.
Non-priority debts are ones which have less serious consequences if you don’t pay them. These bills include things like your overdrafts, loans, hire purchase agreements, credit card accounts and catalog debts. However, if you don’t pay your non-priority debts your creditors may take you to court.
When you have decided what your priority debts are, work out how much you can realistically afford to pay back on your credit card. To do this, you will need to make a list of all the income and expenses for your household.
You may wish to create a budget sheet to help you do this.
Double check your income and make sure you see if there are any benefits or tax credits you are entitled to that you are not getting already – you may be pleasantly surprised. Don’t forget to look carefully at your personal spending and see if there is anything you are able to cut down on or cut out all together. For example, shop around for a cheaper phone service, gas or electricity provider, or look for cheaper mortgage or re-mortgage for your home or insurance providers.
A good debt management company or advice agency can help you put together a budget which will help you increase your income and decrease your outgoings if it is at all possible.
When you’ve worked out how much you have left over after paying your expenses, contact each of your priority creditors. Show them your budget or work with your debt management company or agency (get one here) and try to make an arrangement to pay back what you owe on your credit card as quickly as you find comfortable.
If you can’t afford to pay anything to your priority creditors and your situation isn’t likely to get better, the outcome may be very serious.
How you deal with your non-priority debts will depend on whether you have any money left over from dealing with your priority debts and paying for essential household expenses like housing costs and food. If you have money to spare, you may have several options for dealing with your non-priority debts. However, if you have little or no money left, have nothing of value to sell and think your situation isn’t likely to get better, your options will be very limited.
Be very careful about taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments. Make sure you get some good advice before going down this route but depending on your circumstances it can be useful.
Credit Card Fraud
Credit card fraud is a big problem these days and can potentially give you debts to pay of you cannot afford. It’s your responsibility to protect your card and use it safely. If you think your card details have been copied or stolen tell your card provider straight away or you may start running up debts on your credit card.
Follow these basic rules and help to reduce the risk:
- Don’t let anyone else know your PIN
- Keep your card in sight
- Check your statement each month
- Shred your payment receipts
- Use secure websites for online purchases
- Use an online verification scheme
- Report lost or stolen cards immediately
Credit Reference Agencies
Make A Complaint About A Credit Card Company
Report your credit card company to the FOS if you are unhappy about the way your company has dealt with your credit card payment debt – Financial Ombudsman Service (FOS)