If you’re struggling to pay your bills, and you have unpaid credit card bills that are causing you stress, what should you do?
We all dream about winning the lottery so we can make all of our financial troubles go away. There’s nothing wrong with dreaming. But unless you’re the one-in-a-million winner, you need a plan to pay off your debt.
If you have unpaid credit card bills, here are 3 options to consider:
1) Ignore and hope it goes away. Unfortunately, this choice is as ineffective as dreaming about winning the lottery. At the very least, if your creditors start calling, or send your account to a collection agency, talk with them. Explain that you are having difficulties, and that you want to pay but can’t. But don’t ignore the phone calls. This will only make the situation worse.
2) Declare bankruptcy. Usually the last resort, bankruptcy is an option worth considering if your situation is extreme. Especially if you’ve had a serious life event effect your financial situation. Like losing a job or becoming disabled. There are 2 main types of bankruptcy for consumers: Chapter 7 (where your assets are used to pay off your unpaid debts) and Chapter 13 (where you still have to pay back most of your debts, using a repayment plan). Consult with a bankruptcy attorney if you are considering bankruptcy.
3) Use debt negotiation. An alternative to bankruptcy is debt negotiation. With debt negotiation is a process where you negotiate with your creditors to pay off your debts in a lump sum for a less than you owe. Debt negotiation is more aggressive than traditional debt reduction programs like credit counseling. And it’s not right for everyone. And while you can negotiate on your own, your best option is usually to hire an experienced debt negotiation company or attorney to work out an agreement with your creditors.
Of course, there are other options:
- credit counseling
- borrowing money from friends or relatives
- debt consolidation (or home equity) loans
But if you situation is very serious, it’s probably too late for these options to provide much help. Whichever strategy you choose, the important thing is to take action. Write down a plan. Investigate each of your options. Then decide which one is best for you. Sitting around and dreaming about winning the lottery is a lot of fun. But putting aside your dream and actually doing something about the unpaid credit card bills will help you sleep better at night!
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