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When funds are low and you need to cut back, you’re forced to take a new look at your priorities.  If you’ve reached the point where you’re truly struggling, you might be unable to pay your credit cards.  So what do you do?

Don’t Stop Making Credit Card Payments

If you simply stop making payments, you’re putting yourself in a worse position.  Even if you stopped using your credit card, the current debt will continue to accumulate interest charges and late fees, and these can get out of control if left alone.  Your credit score will also sink lower and lower the longer you do nothing.

Wait long enough and you risk serious damage to your credit score, your history, and your finances.  You creditor could send you to collections, and if the situation becomes bad enough, you could be forced to file for bankruptcy, which will remain a huge black mark on your credit report for 10 years.  Similarly, the creditor could take you to court and win a judgment authorizing them to garnish your wages and claim personal property.

A long history of debt can be tough to get out of, so try to recognize the severity of your financial problems before it gets to this point.  You have options catch it early enough.

Establish a Payoff Process

First, tackle your debts piece by piece.  Pay off your smallest debts first to start removing them from your credit report.  Then take the amount you were using to pay off the smallest one and put it towards the next smallest.  A process like this will take a long time to successfully complete, but it’s a steady and fairly sure process if you’re diligent about it.

You can also talk to your creditors.  Most credit card companies offer hardship programs where your interest or even your payments can be waived for short period of time.  This will show on your credit report, but if you use this little grace period to save up the money you owe, you’ll be back on track instead of in the black.

Talk to your lender, also, if you know you can only make partial payments.  As long as they accept that you are making an effort, it could prevent them from taking action against you.  You may also have the option of debt settlement, where the creditor may agree to let you pay off your debt for less than what you actually owe, and sometimes that can mean you’ll only pay up to half of your actual balance.

Of course, you want to make sure you’re able to make your mortgage payments, keep food on the table, etc.  When you organize your priorities, credit card payments may come up last.  But don’t just let them go.  Take action and use the options that are available to prevent your debt and credit score from tanking.  Stay focused, and it will be possible to turn things around.