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What Happens When You Can’t Pay Your Credit Card Debt in the UK?

Written by, Marija Petkova

Updated May, 16, 2022

If you’re one of the many people who are struggling to keep up with your credit card payments, you’re not alone.

But, what happens when you can’t pay your credit card debt in the UK, and is there a way around it? 

Let’s find out.

What Happens When You Stop Paying Credit Card Debt in the UK?

If you can’t pay the minimum payment your account will go into arrears. When that happens, your lender will contact you and ask you to pay the missing payments. 

If you don’t, your account will default and you will receive a default notice. When a borrower ignores a default notice, lenders usually go to debt collection agents to help them recover the money they owe.

Defaulting your credit card bill might result in fees and interest charges. Your missed payments can also negatively impact your credit score. If they end up on your credit report, they stay there for six years. 

What to Do If You Can’t Make Regular Payments

If you can’t afford to make your credit card payments, contact your lender right away. They can offer to make a new payment arrangement if you fall behind on your bills. 

In case you lose your job, you can try to see if you can make an insurance claim.

If you are struggling to pay credit card debts, you can ask creditors for a credit card payment holiday, which usually lasts for three months and doesn’t affect your credit score, or increase credit card limits. 

If you’re considering increasing your credit card limits, you’ll have to talk to your debt solution provider first as this might go against the terms of your agreement.

How To Manage and Pay Off Credit Card Debt

Paying back a credit card debt can be challenging, but there is a way to gain control of the situation and get back on track. In fact, credit card debt takes an average of 25 years and a month to repay.

If your credit card debt looks impossible to manage, here’s what you can do.

  • Create a budget: If you really want to tackle your credit, you’ll have to create a budget strategy and stick to it. It will help you figure out how much you can afford to pay on a monthly basis. You can also use it to set some funds aside for emergencies. 
  • Calculate how much you owe: You need to know exactly how much they owe, including interest, to create a good payment strategy and figure out what kind of payments they can afford to make. To do so, it’s important to keep track of each credit account’s outstanding balances, interest rates, and required minimum monthly payment.
  • Prioritise high-interest debts: If you have more than one credit card debt, you should focus on paying off debts that have higher interest rates. Consider paying a little extra, provided that you can afford it, to save money in the long run. Note that the UK total credit card debt has reached £60 billion in 2020.
  • Look for alternative lending: If you are spending more money on your credit cards then they are worth, you might want to think about transferring your debt elsewhere.
  • Stop using your credit card: Even if it’s just for a short period, you can leave your credit card at home until you pay back a portion of what you owe. It’s far more difficult to pay off a debt that’s continuously increasing in size.
  • Professional advice: If you’re not sure what to do, you can always seek help from a professional in the field. You can also discuss the pros and cons of bankruptcy.

Minimum Credit Card Repayment

If your monthly repayments are too high, you can look into the minimum monthly payment you can make for each credit card. 

This amount usually ranges between 1%-3% of the entire debt and there’s usually a minimum amount (for example £5).

However, relying on minimum monthly payments may become an expensive method to pay off what you owe in the long run. 

Bottom Line

If you’re struggling to pay off your credit card debt, there are a few things you can do to try and make things more manageable. You could look into transferring your balance to a new card with a lower interest rate, negotiate a lower rate, take a credit card payment holiday, or see if you’re eligible for a hardship plan from your creditor. 

                           

Frequently Asked Questions And Their Answers

Can you be imprisoned for debt in the UK?

In most cases, the answer is no. Debts that can lead to imprisonment include council tax, business rates, and criminal fines. 

Can credit card debt be written off?

If you fail to make payments, the credit card company may declare your debt uncollectible, a process which is referred to as a credit card debt “write-off.” However, you’ll still be liable for the debt, but the write-off will reduce its tax liability.

Can you negotiate UK credit card debt?

If someone can’t pay a credit card bill, they can try getting a payment holiday. Whatever your situation is, it’s always best to talk to your credit card provider to find more about what happens when you can’t pay your credit card debt in the UK and how to find a way around it.