Disabled vet seeks relief from credit card debt

Living on a fixed income, minimum payments become unmanageable

The Credit Guy columnist Todd Ossenfort
Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues.

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Question for the CreditCards.com expert

Dear Credit Guy,
I am retired disabled veteran. I have had tragic financial setbacks. I only have Social Security and disability income from the U.S. government, and no other income. I also have credit card debt. What are the consequences if I can no longer pay minimum amounts due on credit card debt? I have a checking account that direct deposits my two federal government incomes. How or am I vulnerable if I fail to pay the minimum amount due? I am at this time 100 percent current on my payments. I cannot survive without my government income. Help!!! I cannot pay credit card debt any longer and survive!!! Thank you.  -- George

Answer for the CreditCards.com expert

Dear George,
I can hear the frustration and worry in your words and sympathize with your situation. When life throws us a financial curveball, too few of us are prepared to step up to the plate without striking out. Since you have only a limited Social Security and disability income, and it appears you are unable to earn additional income, it's time to seek help and communicate with your creditors either directly or through a reputable consumer credit counseling agency.

Your creditors need to know that you are struggling. This news is not going to be well received, but it needs to be given all the same. All you can do is explain your financial situation, and let them know you can no longer afford to make the minimum payments on your accounts.

If you have not already done so, you next need to make sure you have a budget or spending plan in place to assure that you are living within your means and are saving no matter how small a portion of funds for financial emergencies. Also, common sense says you must stop using your credit cards and adding to the already unmanageable credit card debt. You will want to be better prepared the next time you encounter a financial setback and the best way to do that is to have money in savings available when you need it.

Assuming you do not have the income to repay your debts, your best course of action may be to file for bankruptcy. I recommend that you make an appointment with an approved credit counseling agency for the required prebankruptcy counseling.

Your counselor will review your financial situation and provide any alternatives to filing bankruptcy if your finances should warrant. I do recommend that you pursue any alternatives if they are available to you and choose bankruptcy only as the last resort. Filing bankruptcy and getting a fresh start might be the best and only option for you.

Your credit score will be negatively impacted by a bankruptcy and you will be unable to obtain credit or only able to qualify for expensive credit for many years after you complete your bankruptcy. For this reason, alternatives should always be explored.

Many people in your situation just stop paying their creditors and ignore the situation hoping it will go away. Don't give in to that temptation. For your own peace of mind, I recommend you take the proactive approach and attempt to solve your problem the best way you can.

Other than the constant attempts to collect the debt, if you ignore the situation you run the risk of creditor(s) attempting to collect the debt in court. Although your government income is exempt from garnishment, if you own property, your creditors could be granted a judgment, which could be used to place a lien on your property or force a sale of the property.

Do yourself a favor take the proactive approach and get some counseling as soon as possible.

Take care of your credit! 

See related: Take these steps to avoid wage garnishment, Wage garnishment rules of engagement, Ignoring credit card debt can lead to garnished wages, 5 tips for those considering bankruptcy, 5 tips for those considering bankruptcy, Bankruptcy does offer a fresh start, at high cost, Bankruptcy filings state by state, 2005-2008, Starting over after bankruptcy

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Updated: 01-23-2018