Stuck with card debt with no job, assets

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

Dear To Her Credit,
What happens if I cannot make my credit card payment at all, and I have no job or personal property?   -- Crystal

Answer for the expert

Dear Crystal,
If you have absolutely no money or assets and no money coming in, there's not much the credit card company can do.

The bank can send you notices in the mail. The notices can become more frequent and more insistent. You'll get phone calls from collectors who are experts at trying to find ways to get their money, or at least more information, out of you. Your credit history will get trashed, your interest rate will likely rise and late fees will be assessed. Eventually, you may be sued for the debt.

However, if you truly have no money, now or in the future, all of that effort will get them nowhere. There's nothing for them to collect. You're judgment-proof.

Lest you think that's good news, however, let's look at the long-term picture. It's not pretty.

You don't say how old you are, but if you are fairly young, you've got to consider that your whole financial future is ahead of you. It's not too late to go to school, change careers one or more times, start a fabulous business, become a savvy investor, raise a family or marry someone with financial goals of his own, for example. Maybe all of the above.

Letting credit card debt go by just not paying it can jeopardize any plans you may have. You might not qualify for a private student loan with a bad credit history. You almost certainly won't get a small business loan with unresolved credit card debt. Potential employers don't always check credit scores, but some of them do. Everything is harder with old debt on your shoulders.

If the bank gives up on you, you might start to think you've gotten past it. You might even forget about it. Chances are, however, that eventually the debt will be sold to a debt collector, who is willing to gamble on collecting from you again. And it will be much more expensive by then. Debts can easily double or triple in a few years' time with high interest rates and late fees.

What I would suggest is that instead of not making your credit card payments at all, contact your bank and try to work something out. Ask if your issuer offers a hardship plan. If you have recently become unemployed, they may give you a reprieve for a few months while you look for work. In addition, you'll have a deadline to work toward, rather than the feeling that once you miss a payment or two, you'll never catch up.

The next thing you should do is find a source of income. Make looking for work your full-time job from now until you find something. Expand your options -- almost any job is better than none. Consider getting minimal training if necessary to get started. For example, many food service jobs require a food handlers' permit. In some states, you can get one for $10 or so. Every time you see a closed door, ask yourself what it would take to open it.

Consider making money in other ways, such as buying and selling things at garage sales, doing child care or landscaping, or whatever else you may be good at.

When you have a little money, you can start dreaming bigger. Take a class, invest a little more in your own business or move someplace you've always wanted to live -- especially if that someplace can give you greater opportunities.

You have no job and no personal property now. That doesn't mean anything --  many people have been there once. Keep in contact with your creditors, do your best to pay your debts off and take good care of your big dreams for the future. 

See related: She has llamas, horses, dogs, no job and big debt

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Updated: 01-17-2018