I was laid off last week. I will be claiming unemployment while I'm job hunting, but my benefits won't be as much as my paychecks. I'm trying to stay OK about all of this, even though it is hard on me. It should not be too hard to get a new job, as I'm in IT, but I have $10,000 on my credit card that I gathered from a car wreck last year, so I'm under pressure. For the past nine months, I sent twice the minimum they wanted. I thought I was doing the right thing. Now, I don't think I will have enough for the minimum. Would the card company allow me to put the extra money toward upcoming payments? If I had known I would be laid off, I wouldn't have paid more.
Rewind on the regrets! When you were deleting your credit card debt at an accelerated pace, you were doing the right thing. If you hadn't, your current balance would be bigger, as would the minimum payments.
Unfortunately, your proposed plan is creative, but not realistic. The credit card company already applied the funds that you sent to your account. They aren't going to remove the extra money from the equation, hold the cash in reserve, and mete it out incrementally so you can remain in current status. I wish it were the way things are done, because the more I think about it, the more I love this idea!
What you do have in your favor is the relationship you've cultivated with this company. With almost a year of doubling down on payments (which I presume were all on time), you have demonstrated responsibility. Most credit issuers are happy to assist cardholders like you.
You do need to communicate with the company, but before picking up the phone, know what you have to work with. You may be able to send them more than you think by making a few budgetary adjustments.
Create a temporary cash flow statement. The purpose is to prioritize expenses and stay in control. It is very important that you meet your essential expenses, which include the bare minimum for your creditors, while you're in the process of securing another position.
On a spreadsheet, list everything you normally spend your money on, then subtract the total from what you'll be receiving from the unemployment insurance program. You'll be in the red: Eliminate or reduce those expenses that you can live without for a while. You may have to make some hard choices, but remember it's not forever.
If you discover that you'll have enough for all your basic needs plus the
minimum credit card payment, you're in excellent shape. No phone call is needed! However, if you can't make the entire payment, you'll need to communicate with your credit card company right away.
Tell the representative that you are unexpectedly unemployed, and need some assistance. Ask to speak to someone who can help. When you have that person on the line, get his or her contact information. You will be following up with a letter that outlines what you discussed.
After explaining your situation, point out that you've been a superb cardholder and be clear that you want to maintain your positive relationship with them while you're fixing your problem. Will they accept smaller (or no) payments for a fixed number of months, and continue to list your account in good standing? Even if they don't — and they aren't required to — summarize the conversation in a letter and send it to the person you spoke with, along with a good faith payment if you can manage it. Be sure to keep copies.
Then, follow through on all promises. If you said you'd pay half the minimum and would resume full payments in four months, do it. The issuer may still report you as delinquent, but you'll have proof that you've done your best, and it could prevent severe collection action.
Once you have a job, contact the creditor again to show you're ready to be the same great cardholder you were before — and will be from now on.
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