Expert Q&A

Yes, your card payment can be rejected if it’s too small


It may be shocking, but a credit card issuer can refuse to accept your payment if the amount is smaller than the minimum that you owe

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Question for the expert

Dear Credit Care,
We have accrued a large amount of credit card debt that we were very good about paying. However, my husband was recently without a job for 18 months, and we found out I was pregnant a month after he was laid off. We struggled and made payments; however, were unable to make a payment on a large credit card debt.

My husband now has a new job and we are trying very hard to work with creditors, but there is one company that will not accept a payment of $300! Can they do this? They stated that we are not working with them and will only accept a payment of $3,500 or $500 a month. If I had $500 a month, I would gladly pay them; however, I don’t. Can they refuse a payment? I thought it was illegal for a company to refuse any payment that we are trying to make in order to get it back on track. — Cindy

Answer for the expert

Dear Cindy,
Congratulations on your new baby, your husband’s new job and your efforts to keep up payments on most of your credit card debt during a difficult time. I’m sorry to hear you are having trouble negotiating a repayment plan with the creditor of your large credit card balance. Sometimes creditors are unwilling to accept what is a reasonable offer in your mind for repayment. If the $300 per month you are offering to pay is less than the minimum payment terms of the original cardholder agreement for the account, the card issuer — or the debt collector — is within their rights to refuse the payment. Even if the account is in collections, the terms of the original agreement are still in force. That includes interest charges and any fees that might apply to your balance.

My recommendation is that you seek help from a reputable nonprofit credit counseling agency. Many times, a creditor is willing to accept repayment terms through a credit counseling agency that they may not be willing to accept when working directly with a consumer. One of the main reasons is because the creditor knows three things:

  • The credit counselor has reviewed your finances.
  • You’ve agreed to make your best effort to pay what you can afford.
  • The repayment amount will lead to your balance being paid in full in five years or less.

That last point is key. To arrange a repayment through a credit counseling agency, you will need enough income to pay off what you owe within five years or less.

So, contact a nonprofit agency with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies and speak to a certified counselor. After a thorough review of your current expenses and income, your counselor will make recommendations on how best to resolve your current situation.

If you do not currently have enough income to repay your debt through a debt management plan with a credit counseling agency, you might consider contacting an attorney who specializes in collections. The attorney may have better luck negotiating an affordable repayment plan with the collector. Or keep trying to communicate with the creditor regarding repayment. Ask to speak to someone who has the authority to negotiate repayment and specifically request a hardship program. If you don’t receive the help you need, ask to speak to that person’s supervisor and be sure to stick to the monthly repayment amount you can afford. Keep records of the dates and times of calls and who you speak with.

Should the creditor continue to be unwilling to accept your repayment offer and decide to sue you in court to collect, I recommend you hire an attorney to represent your interests. And give your attorney your records of efforts to try to negotiate repayment with the creditor.

Handle your credit with care!

See related: 15 questions to help you find the right credit counselor, Pros and cons of debt management plans

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