How Can I Repay My Credit Card Debt When I Have a Fixed income? – Gary

“Dear Steve,

I owe about $8000 in credit card debt. I am on fixed income of about $750 a month and I have $350 a month I pay towards a mortgage plus utilities. My monthly credit card payment is about $140 out of which most is for interest.

How do I go about clearing this debt as right now as it appears to be impossible and is there anyway to forgive the interest and just pay the principle or reduce the repay amount?


Dear Gary,

If you were to continue to make payments on your debt you should explore a credit counseling program under which your creditors might reduce your interest rates further. You can click here for credit counseling information.

But if the issue is that based on your income, any payment in the $140-$160 a month range is just not manageable then we need to look at other options.

One option would be for you to stop paying your debt and use your limited funds to live on. This will land you in debt collections and you may get calls and sued. If your only source of income is social security or some other type of retirement benefit then the creditors may not have any luck forcing you to pay. However this approach can be annoying as creditors and collectors continue to call you for payment. This approach is often referred to a person being “judgment proof.” In fact it’s a bit of a misnomer. The person may be off limits to collect on a valid court granted judgment but can still get a judgment against them to pay past due debts.

If you want to end this process once and for all then you might want to contact your local pro-bono legal aid office and see if they could assist you with bankruptcy. Bankruptcy would prevent you from being sued, stop all collection calls and let you move forward with your life.

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Bankruptcy is probably the logical path here. It would be unreasonable to expect that the cost of living is going to go down and as more pressure is placed on your limited funds each year you may just find it impossible to continue any payment plan you may create now.

Please update me on your progress by

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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