Cannot pay enough to mitigate late/overdue fees on credit card. What is the best way to handle this?

Question

I've tried working with a credit card company over late fees/debt. I can of course make some payments, but they're always lower than the overdue fees they continuously charge. In other words I'm paying, but still always guaranteed to be kept falling behind with this regimen, so it seems futile.

What is the best way to handle this? Keep paying and keep falling behind regardless? Ask the company to charge it off and change the terms so that I'm no longer accruing debt even as I pay?

Because if I'm charged more than I can pay, won't this be like grasping on to a slippery rope as you keep on falling and falling down? It seems logical to pay because you owe debt, but you can't ever fix the issue with this approach. Should one keep paying but accruing more of a net loss endlessly?

Even if you worked with a payment plan, those are limited and they go back to full effect on late fees/etc. right after the program ends, which forces you back in to a constant net loss & vicious cycle.

Answer 1

If you literally do not have the money to make then minimum payment, then you should not pay, because it is futile, as you say.

Instead, you should immediately contact the creditor, let them know the situation, and try to work something out with them. If this is a temporary situation (for example, if you’re between jobs), they’ll handle it differently than if you don’t expect to ever be able to pay the debt.

If they aren’t willing to work with you and you don’t have the money, you can declare bankruptcy or simply stop paying. Bankruptcy lets you preserve some assets (including future earnings and assets, assuming you hope to have some). If you don’t have any assets, there’s no need to declare bankruptcy—they can sue you and get a judgement, but there’s nothing for them to collect. That’s why they should be willing to try to work with you.