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Should I Stop Paying One of My Credit Cards? – Bianca

“Dear Steve,

My hours were just downsized at work. I have been staying afloat on all of my credit cards until now. I currently have a bill due that I cannot afford to pay. I have paid my others but this one has about a $6,000 balance with a minimum payment of $175. So as much as I don’t want to, I may have to go without paying it and ruin my credit and so forth. I was just thinking that maybe I could let this one go into collections and then settle for less because even paying the minimum is not making a difference when $135 of the $175 is going to interest charges. The only positive I can see is using any extra money that I may have to pay my other credit cards and then saving up to settle. I was also thinking about debt consolidation or settlement but I’m very skeptical about those services. Any help or insight you can provide will be great thanks!

Wondering what will happen if I stop paying one of my 7 credit cards and if my total credit card debt is about $14,000, should I file for bankruptcy to take care of all the credit card debt.

Bianca”

Dear Bianca,

Based on the fact that you were using your cards to stay afloat and then your hours were downsized, I’m not convinced that simply stop paying one card is going to make a difference.

To dig yourself out of this hole you’d have to not live on the cards at all or increase the balances and pay more than the minimum payment to pay back what you owe.

By letting just one card go it is possible your other creditors may raise your interest rates because of the greater risk you would now pose. The lone default would impact your credit score for the worse.

I would imagine that with your income cut you are probably not able to make the minimum payments so that excludes a credit counseling solution. In a credit counseling program your interest rates are reduced but the payment is about what your minimum payment is and the cards are closed so you can’t live on them anymore.

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If you are going to embark on a solution the first step should be for you to talk to a local bankruptcy attorney and see what they have to say. Talking to a bankruptcy attorney does not mean you are going to file bankruptcy, just educate yourself about the option so you can make a better and more informed decision about what is right for you. Talk to the bankruptcy attorney and report back in the comments to let me know what you think.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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Steve Rhode

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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