What to Do When You Can't Pay Your Credit Cards?

Call your credit card company if you won't be able to make a payment.

Whether you lost your job, had an unexpected bill pop up or just spent more than you could afford, if you can't pay your credit card bills, taking action could prevent serious blemishes on your credit report and other problems. Ignoring the situation will result in high fees, additional interest and may even end with your account being sent to collections or a legal judgment against you, which could result in wage garnishment of up to 25 percent of your after-tax pay. Many credit card companies will be willing to work with you if you acknowledge the situation, and there are other places you can turn for help even if the lender won't budge.

Contacting Creditors

The first and most important thing you must do if you can't pay your credit card bills is contact the companies and explain your situation. Be honest with the companies regarding how much you can reasonably pay. Many credit card companies will work with you to devise a new payment plan or minimum payment amount that can help you get back on track and avoid having your account sent to collections. Call the companies as soon as you know you won't be able to make the minimum payment by the due date. The earlier you contact your creditors, the more likely they'll be to work with you. And if you can get a new minimum payment amount or a new plan worked out before the due date, you may be able to avoid having the company report a late payment to the credit bureau -- a small thing that can have a big impact on your credit score.


Once you've worked out a new payment plan with your creditors or if they declined to budge on the payment terms, it's time to sit down and get serious about your budget. While you can't control things like getting laid off or having to pay for an unexpected medical procedure, many people get in over their heads with credit cards due to a simple lack of sound budgeting. Making a list of all of your expenses can help you strike nonessential items, like cable television or extra cell phone services, from your budget until you get caught up with your credit cards. Even if your debt seems insurmountable, adding an extra $10 or $20 to your monthly payment amount can significantly reduce the amount of interest you pay over long periods.

If you're not sure where your money is going each month, track your expenses by using a debit card tied to a bank account with online access so you can see your purchases. Or make a list of every penny you spend for a week to help you decide where to tighten the purse strings. Credit counseling services can help you develop a budget and plan if you're still having trouble. But make sure you choose a reputable agency and ask about any associated fees for the service. Your bank or financial institution is an excellent place to start when seeking credit counseling. Many institutions employ counselors for their account holders and even if yours doesn't, it can likely help you find a trustworthy agency.

Other Options

Debt settlement programs can negotiate with the credit card companies to reduce your total debt in some cases. It's important to speak at length before enrolling in one of these programs, however, as there is no guarantee it will be successful in reducing your payoff amount. If you owe a large amount or have other debts that you're having trouble paying, speaking with your financial institution about a debt consolidation loan or a home equity line of credit can give you the money you need to pay off your credit cards at a potentially lower interest rate than what the card companies are charging you.

As a last resort, filing bankruptcy and including your credit cards can permanently resolve the debt. Filing bankruptcy can have serious legal and financial implications depending on your personal situation and assets, so it's best to discuss the possibility with an attorney who is well-versed in bankruptcy law to help you decide if bankruptcy is the best course of action based on your debts.

Stopping Contact

While staying in contact with your creditors is a good idea when you're having trouble making your monthly bills, you do have rights under the Fair Debt Collection Practices Act to prevent credit card companies from harassing you. Credit card company representatives who are trying to collect from you may not threaten you or misrepresent themselves.

If you do not want the company to contact you further, you can notify the company in writing that you do not wish to have any further contact with it. Sending the letter via certified mail with a return receipt gives you a record of when you sent the letter and when it was received. Once a company receives the letter, it may not contact you except to notify you of specific actions it is taking to resolve the debt, such as suing you.