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.
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 agencies like CDER, BPO and Capquest 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.
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.
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.
You might be interested in: Debt Consolidation Loan for Poor Credit.
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.
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.
In most cases, the answer is no. Debts that can lead to imprisonment include council tax, business rates, and criminal fines. But there is a possibility of being issued a CCJ.
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.
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.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.