The Credit Card Pit of Doom
It all starts out innocently enough - a coffee, a dvd, a round of beers. No problem, that paycheck's coming in 2 weeks and the credit card balance will get paid off. That nice HDTV is a little more than you wanted to spend, but you'll just cut out the coffee and fancy diners next month. But you don't, and then you get hit with unforseen expenses like car repairs. Before you know it, you're in over your head and quickly sinking down the credit card pit of doom.
Worst Case Scenario
Maybe you’ve found yourself in a worst-case scenario - your minimum payments are more than you can afford each month. Failing to meet your minimum payments can jack up your rates and cost you hefty fees. This accelerates the problem and makes it even harder to dig yourself out. Unfortunately many simply ignore the problem.
Defaulting on your credit card debt can have far reaching effects. Your credit report and score will take a huge hit, limiting your ability to gain credit in the future. Landlords will think twice about renting to you and even some employers will check your credit profile before offering you a job.
It’s not a good position to be in, but there’s hope and there’s help. The first thing you should do when you realize that it’s impossible for you to make all your payments in full and on time is to stop spending and contact your lenders and creditors.
Many companies have special policies or programs for customers who are in financial dire straits. If you’ve lost your job, received a cut in pay, and can show proof that you don’t earn enough to pay what you owe, most creditors will work with you on a payment plan, even if it’s just temporary. However, simply being irresponsible wont help your cause.
Ask for Credit Management Help
You can also seek out advice from credit and financial professionals. Check your local listings for credit counselors, and give your City Hall or State Legislature a call to see what kind of services they provide for folks who could use some credit management help.
You won’t get any free handouts. Nobody’s going to come along and pay off your bills, but what you can do is get some credit counseling. A credit counselor can help you learn new skills and methods for managing your finances, and often will help you negotiate a new payment plan - one that fits into your budget.
The earlier you start fixing a flawed credit profile, the more quickly and easily you’ll be able to improve your credit score and start receiving better credit and loan offers. The key is to practice good credit management and to reach out and ask for help as soon as you think you might be in trouble.
