How to Get Rid of Credit Card Debt When You Have No Money to Pay
Being flat broke with credit card balances looming is one of the most demoralizing, hopeless feelings you can have. Every dollar gets strategically allocated to bare necessities like food and keeping a roof over your head, while the debts continue to inflate thanks to compounding interest charges.
No money to pay credit card debt can put a major strain on your finances, especially if you already have other bills to pay. It can also result in late fees and a blemish on your credit report, which can cause your credit utilization ratio to go up and lower your credit score.
No Money to Pay Credit Card Debt? Here’s What You Can Do
If you’re struggling to make your payments, reach out to the card issuer to explain your financial situation. Creditors may have hardship programs that can help. These programs are typically short-term solutions that last a few months to a year. They can include a reduced payoff amount, interest rate reductions or even a waiver of the minimum monthly payment.
Another option is to work with a debt relief company to negotiate what’s known as a debt settlement. The goal is to get creditors to accept a lump sum that’s lower than the total balance in exchange for wiping out the remaining debt. This can impact your credit, but it’s a better alternative to going into arrears or having the account charged off.
Another legal way to wipe out credit card debt is filing for bankruptcy, which involves liquidating assets above certain exempt amounts to repay as much of the debt as possible. While this hurts your credit, it’s often the only option for those who are severely insolvent.