I Live on Social Security and a Small Pension and Can Barely Make It.

“Dear Damon,

I live in california and i am retired and only income i receive is social security and a small pension from a job i worked at many many years ago

I have two credit cards. each have a balance of $2000.00, total of about $4000.00. i have not missed a payment or been late with a payment. at first i was sending checks and at times the credit card companies would misplace my payments and i had to have my bank send then info as to when i paid and where the bank has paid to them. as a result of this the creditors still would charge me late fees and raise my interest rates. talking to them by phone was useless. then i started to pay by phone for them to take payment from my checking account this has stopped late fees but interest rates have not gone down. .i can barely live on what i receive from social security and my small pension, and my question is if i just stop paying them, can they get a judgement against me and garnish my checking account? these companies are ruthless and refuse to compromise with me. and i cannot afford the minimum payments anymore. i would appreciate your advise on my situation. thank you so much.

Janice”

Dear Janice,

Regarding these two credit cards. If you are on a fixed income of only SS and Disability and have no money available to pay these debts, then you may be judgment proof, however you would need to speak with an attorney to confirm that. Do you have any assets?

What happens if you stop making payments because you can no longer afford to pay them? They will call and want money, they will raise your interest rate to the default interest rate and add late fees. Will they sue to collect the money? They have the option to. Can they garnish your Social Security or Disability? No, typically this type of income is protected as long as you are not putting any other money from additional sources into that bank account you should be ok.

So while it is a tough call, based on the limited information you have given me, I would have to lean toward letting the credit cards go and then saving any money that you could afford to save so that if they do get aggressive down the road, you might be in a position to offer a settlement. Typically, once you get about a month or 2 behind, many creditors will offer to substantially lower your interest rates to help you pay off the cards, so that option may come up as well. Unfortunately when you continue to pay, they are not usually prone to helping you out. I know it seems like an idiotic way to do business, but it is the way they do it.

Damon is a talented independent debt coach that provides in-depth assistance and consultations for people struggling with debt. If you want a personal debt coach to help you through a difficult situation or want assistance to find secret discounts offered by debt settlement companies I think Damon Day is an excellent person to contact for advice and assistance. He can be reached directly at DamonDay.com

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