What should I do if I can’t pay my credit card bills? | Consumer Financial Protection Bureau (2024)

FAQs

What should I do if I can’t pay my credit card bills? | Consumer Financial Protection Bureau? ›

If you can't pay your credit card bill, it's important that you act right away. Contact your credit card company immediately because many creditors may be willing to work with you to change your payment if you're facing a financial emergency.

Your credit card company may be able to help. And it has good reason to do so -- it's better for your card issuer if you pay what you can than if you don't pay anything. Call the number on the back of your credit card, explain that you aren't able to make your full minimum payment, and ask what your options are.

Explain your situation to your bank or credit union and see what options are available. Ask if the issuer has hardship programs and explain the specifics of your situation if you have unexpected medical bills, funeral expenses, a job loss or reduced income.

If you miss too many payments in a row, your credit card company may take you to court to recover the past-due amount owed on the account. If they obtain a judgment, they may be able to garnish your wages or the money in your bank account — or could even put a lien on your home or other properties.

Call Your Card Issuer

By calling, you're also showing willingness to take responsibility for your debt. That may lead to additional leniency as you work out a payment plan down the line. Banks prefer to work something out directly instead of sending your account to a collections agency.

George graduated from BYU Law school in 2020 with a JD/MBA. In his spare time, George likes to cook, because he likes to eat. Summary: On average, credit card companies sue for non-payment in 1 out of 7 cases, or about 14.5% of the time.

Credit card forbearance programs are provided by card issuers to offer consumers facing financial hardship, such as recent job layoff, reduction in working hours or furlough, temporary relief. Some common types of forbearance include: Pausing monthly bill payments.

If you fail to pay at all

Rather than sending the debt to collections, the credit card issuer may take legal action against you by filing a lawsuit.

I understand why you feel like ignoring it is your best option, and you're not entirely wrong. Here's how the “seven-year rule” works: Under the Fair Credit Reporting Act, federal law requires that delinquent debts drop off your credit report after a seven-year period since you stopped making payments.

What is the fastest way to get out of credit card debt? ›

Although the unpaid debt will go on your credit report and have a negative impact on your score, the good news is that it won't last forever. After seven years, unpaid credit card debt falls off your credit report. The debt doesn't vanish completely, but it'll no longer impact your credit score.

If you get a summons notifying you that a debt collector is suing you, don't ignore it. If you do, the collector may be able to get a default judgment against you (that is, the court enters judgment in the collector's favor because you didn't respond to defend yourself) and garnish your wages and bank account.

The general rule of thumb is that you shouldn't spend more than 10 percent of your take-home income on credit card debt.

Any amount remaining on your statement balance will begin to accrue interest — as will any new purchases charged to the card — but the smaller the balance you have, the less you'll spend on interest.

It will take 47 months to pay off $40,000 with payments of $1,200 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.

A credit limit is the maximum amount of credit a financial institution extends to a client on a credit card or a line of credit. Lenders usually set credit limits based on specific information about the credit-seeking applicant, including their income and employment status.