What Happens When You Can No Longer Pay Your Credit Cards?

Falling behind on credit card payments can trigger a series of unfortunate and stressful events for you. In addition to negatively impacting your credit score, credit card companies may call you about missed payments.

If you have a line of credit, it may be reduced or cut off completely. If your line of credit is closed it reflects negatively on your credit report because you owe more than what you are able to spend. 

If you miss too many payments, a credit card company may send your debt to a collection agency. Collection agencies can be unpleasant to deal with and sometimes pursue further legal action in court, resulting in the garnishing of wages or property.

Reasons people fall behind on credit card debt

Family emergencies such as illness or sudden job loss are among the most common reasons people fall behind on their credit card debts. Most people do not simply stop paying because they choose to. There are often immediate consequences to expending the money on credit card debt versus paying other bills such as food and heat.
Using credit cards for impulse purchases or emergency expenses can also lead to inability to pay them back in the future. Sometimes, students end up with credit card debt when they graduate from university, yet they do not get their dream job immediately and can no longer pay off their credit card debt. Whenever you use credit to fill a gap where there is no cash, you run the risk of incurring debt you cannot pay back.

What should you do?

1. Talk to your creditor and see if you can make a catch-up payment if you are only a month or two behind.
2. Consider ways to earn extra cash and pay your debt or how you can cut unnecessary expenses.
3. Look into consolidating your debt into a larger payment with one lender.

These steps involve a great deal of research. You may want to consider credit counseling as a way to get the information you need upfront.

How can credit counseling help you?

If you need credit counselling in the Eastern Ontario Region, D. &A. MacLeod is available to assist you. Our services include information sessions, one-on one-counseling and helpful advice. We can also help you make an informed decision about some of the legal options you have when you fall behind in debt, - such as orderly payment, debt consolidation, bankruptcy and more. For more information about our credit counselling services, please contact us today.