When you sign on with a credit card company, you agree to certain repayment terms and conditions. If you can't meet your financial obligations, the credit card company is within its rights to attempt to collect the debt, even by taking you to court However, if you lose your job or have extenuating circumstances that impact your finances, you may be better positioned to negotiate your way out of debt.
Contact Your Creditor
Call the customer service department of your credit card company as soon as you know you won't be able to make a scheduled payment. Explain the circumstances of your job loss and ask what options you have available to you. If you’re actively seeking work or collecting unemployment, the credit card company may make arrangements to let you skip or defer a payment while you get back on your feet. If your situation is more long-term, and you don't think you’ll be able to pay your credit card bill at all, you might have to look at other options to avoid getting sued.
If it's been several months since you've made a credit card payment, your credit card company might be open to debt settlement. This is when you settle your debt for less than what you owe. For example, if you owe your credit card company $1,000, it might be willing to accept $500 to settle and close your account. This can be damaging to your credit, and you have to come up with the cash to make the deal, but it can help you avoid getting sued for nonpayment of credit card debt.
If you're behind on lots of bills because of your job loss, make it a priority to find new employment, even if it's only part-time or temporary work. This will help you stay current on your bills while you look for something more permanent. Save money by reducing expenditures in other areas, cutting back on everything but nonessentials. For example, eat at home instead of dining out, carpool or take public transportation instead of driving, and cut down expenses that are “extras,” such as entertainment and cable packages. This can help you stretch your financial resources and meet your debt obligations.
If You’re Sued
The credit card collection process can take several months, and a card company is more likely to be aggressive about going after large sums of money in court than small ones. As soon as you miss a payment, your credit card company will probably contact you by mail or phone to check on the status of your payment. You'll likely be assessed late fees and penalties, and may even see an increase in your interest rate. It’s typically several months after payments are missed that any court-based action begins, so you'll likely have some time to find new revenue streams and come current on your bills. If you need help getting your finances sorted out, visit the Federal Trade Commission website and learn about how to find a nonprofit credit counselor in your area.
- FTC: Fair Debt Collection Practices Act
- Bankrate: Paying Less Than the Minimum
- MSN Money: 7 Tips for Settling Your Own Debt
- Board of Governors of the Federal Reserve System. "Consumer Credit - G.19," Accessed Feb. 29, 2020.
- Experian. "2019 Consumer Credit Review." Accessed Feb. 29, 2020.
- Vanguard. "What's the Right Emergency Fund Amount," Accessed Feb. 29, 2020.
- Capital One. "Tips to Avoid Late Payment Fees," Accessed Feb. 29, 2020.
- Capital One. "Want to Use Your Credit Card to Get a Cash Advance," Accessed Feb. 29, 2020.
- American Express. "What to Know About Your Cardmember Agreement and Credit Card Terms," Accessed Feb. 29, 2020.
Lisa McQuerrey has been an award-winning writer and author for more than 25 years. She specializes in business, finance, workplace/career and education. Publications she’s written for include Southwest Exchange and InBusiness Las Vegas.