What to Do if You Are Unemployed and Can't Make the Minimum Payment on Your Credit Card
While many people have trouble managing debt, dealing with unemployment can make credit card debt even more difficult. If you find yourself in this situation, you're not alone; according to the U.S. Department of Labor, the number of displaced workers nearly doubled between 2007 and 2009. Due to this trend, assistance has become more available from creditors and other organizations. Getting help now could be the deciding factor in your financial future for years.
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Time Frame
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The length of time you have before your payment is reported as late is determined by your credit agreement. So contact the credit card company as soon as possible if you cannot make your minimum payment. Accounts reported to credit agencies as more than 30 days past due are considered delinquent.
Types of Assistance
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Banks may be willing to waive fees and reduce interest rates on your credit card in order to help you make the minimum payment. Debt consolidation companies can assist you by renegotiating your agreements with creditors and determining a payment that you can manage. The U.S. Department of Agriculture also offers need-based assistance with food, which may free up funds in your budget to pay credit card and other bills.
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Offering a Solution
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Gather all of your financial information, including a basic summary of all of your household expenses. Call your creditor and ask to speak to someone who has the authority to make changes to your account. Offer a solution instead of asking for one. For example, let the creditor or agent know that while you cannot pay the current amount, you can pay X amount for Y time period before returning to your normal repayment terms.
Rights of Creditors
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Creditors have the right to sell your debt into collections should you not reach a repayment agreement or fail to adhere to any solution that may you have agreed to. They can also file suit against you, resulting in liens filed on your property and/or your current bank account or garnishment of future wages.
Preventing Future Repayment Issues
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Once you and your creditors reach a solution, take steps to make sure you do not make late payments again. Create and stick to a detailed household budget, accounting for all expenses and debts. Once you are re-employed, take advantage of any payment protection plans your creditors may offer, as several will cover your minimum payments in the event of unemployment for up to a year.
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