Credit card debt can be difficult enough to repay when you have a job. If consumers become unemployed after amassing credit card debt, their income will be drastically reduced. In order to survive, they must change the way they live. Being late with credit card payments affects their credit score.
Maintaining payments prevents credit card accounts from slipping into delinquent status, maintaining a more positive financial picture.
Sit down and list the sources of income, which may include unemployment compensation
Check the savings account balance to see if it includes enough money to pay the mortgage or rent, utilities, food, and other living expenses. If you finance a car, there will need to be enough money to make the car payments or the car may need to be sold. Most people do whatever they can to retain their vehicles because these autos are needed during the job search.
List each credit card account, its current balance, interest rate, and minimum monthly payment required. Sum the monthly payments and compare this to monthly income to determine whether there is enough money to pay credit card bills in addition to other bills. If there is a shortfall, contact each credit card company and explain the situation. Provide details about income and expenses and answer questions regarding employment prospects.
The creditor may offer to reduce the minimum payment amount or the interest rate
Some credit card companies will suspend interest payments or eliminate fees for a limited time. Request an extended window before the new payments must begin. This provides time to begin getting finances under control. Revise the budget to reflect the new payments and make each payment on time. Consumers who are unable to make any payments may be contacted periodically by creditors to see if the financial situation has changed.
A debt consolidation loan may be an option for some consumers. It is one way to reorganize debt to prevent credit card balances from building or becoming delinquent. Loan proceeds are used to repay all credit card balances and the consumer is left with a single monthly payment for the loan. This payment is typically much less than the combined credit card payments. The individual makes the loan payment each month, paying down the balance over a period of several years.
Various UK lenders offer debt consolidation loans so shopping around is recommended
This enables a consumer to find the loan with the lowest interest rate and longest repayment period, making it most affordable each month. By repaying credit card balances immediately using this loan, consumers prevent interest and late fees from accruing on their credit card accounts.
Bankruptcy is a last resort for consumers who have no other way to repay their credit card debts. The bankruptcy court will issue an automatic stay, forcing covered creditors from pursuing additional collection activities. Though bankruptcy will damage the credit score and can remain on the credit report for up to ten years, it can be used to wipe out the credit card and other types of debt.