Legal Question in Credit and Debt Law in North Carolina

If you pay less than the minimum payment, the account will go past due. Late fees will probably be assessed. If a penalty interest rate applies, your interest rate will go up. If this is a permanent situation and you cannot work out an affordable arrangement with your credit card company, you should speak to a qualified attorney as soon as possible. Making less than the minimum payments when you cannot afford to pay your credit cards can be worse than making no payments at all in some circumstances. There are several alternatives available for people who cannot afford to pay their credit cards. Only a licensed attorney can give you complete advice about all of these options.

I don't understand the question. Are you asking if you can pay less?

The answer is yes. But that is going to have negative consequences for you as noted by Attorney Coleman. The problem if you do that is you are going to incur late fees and the credit card company will jack up your interest to the default rate.

While you can see what the credit card company will do for you, the sad answer facing many of my clients is that the credit card company refuses to do anything for the debtor while the account is still current. They will cut all kinds of deals for you but only after the account is 90 days delinquent when your credit is already ruined.

I agree with Attorney Coleman. Before you decide to pay less you need to have a thorough in depth consult with an attorney (or get a free consult at a place like Consumer Credit Counseling - go to www.nfcc.org to find a non-profit in your area). Understand though that these places work hand in hand with the creditors because they are financed by the creditors.

So only use them to look at your financial picture and get help.

Here are some tips if you are a do-it-yourselfer:

(1) why are you in this position? Is it temporary? Or long-term? Will things ever get better for you financially? Will you be needing credit in the future? Are you young enough to be acquiring more assets?

(2) can you manage your debts with some guidance (i.e., are you still working??) There are lots of tips for dealing with debts - you have to prioritize and pare expenses.

You can either throw as much money as you can at the biggest debt and work your way down or start with the smallest and work your way up. You can try to consolidate by either a debt management plan at consumer credit or getting a home equity loan and paying off the debts that way and just paying back your loan which is usually at a lower interest rate. I am not a fan of using the home like an ATM so you have to be disciplined not to use any more credit again if you do this. If you still have good credit, some people also play the balance transfer game by transferring balances to lower rate or zero rate cards so they get their debts paid. There are gotchas with this so read the fine print regarding use of the new card (basically you cannot use it because the teaser rate applies to transfers only) and there are transfer fees.

(3) if you are bad enough off, then focus on paying the mortgage, for food and your car if you have a car loan. Stop paying the credit cards. It will trash your credit but if you are in a bind, then that is the least of your worries. Start saving funds so you can settle your debts at some point - use the funds you would have paid to the credit cards for your savings.

(4) for those in a desperate situation, bankruptcy may be the only option. This is an option of last resort after it is determined that nothing else will work. This should only be done after reviewing your situation with an attorney.

I give free purely email consults. I charge $75 for a 30-minute phone consult. Either way, it should not take more than this to give you a rough idea of what you should do in your circumstances. Please email me at [email protected] if interested.