Contact your card issuer before the payment is due
Call the customer service number on the back of your card as soon as you know you cannot make a payment. Do not wait until the bill is overdue. Card issuers have hardship programs designed for people in temporary financial difficulty, and they are more likely to work with you if you reach out first.
When you call, explain your situation clearly: job loss, medical emergency, reduced hours, or whatever has changed. Have your account number ready and be prepared to describe how long you expect the difficulty to last. The representative may offer you options on the spot, or they may transfer you to a department that handles hardship requests.
Keep the name and employee ID of anyone you speak with, and ask for confirmation of any agreement in writing. Card companies handle thousands of these calls daily, and written confirmation protects you both.
Key Takeaways
- Contact your card issuer before your payment is due, not after, because hardship programs work better when you initiate the conversation.
- Card issuers can lower your interest rate, reduce your monthly payment, or pause interest temporarily without closing your account.
- Missing a payment damages your credit score when ready, even if you pay a few days later, so prevention is better than catching up.
- If you cannot reach an agreement with your issuer, nonprofit credit counseling services can negotiate on your behalf at no cost.
- Debt collection calls follow specific legal rules, and you have the right to stop them by sending a written request.
Hardship programs your card issuer may offer
Most major card issuers have formal hardship programs that do not require you to be in default to use them. These programs typically include a temporary reduction in your monthly payment, a lower interest rate for a set period, or a pause on interest charges while you stabilize your finances.
Some issuers will also allow you to skip one or two payments without penalty, though interest usually continues to accrue. Others offer a structured repayment plan where you pay a fixed amount each month for 3 to 60 months, depending on what you owe and what you can afford. The terms vary by issuer and by your account history, so ask specifically what options exist for your situation.
These programs typically last 3 to 12 months. After that period ends, your regular terms resume. During the program, your account remains open and in good standing if you make the agreed payments on time.
What happens if you miss a payment
A payment is considered late if it arrives after the due date shown on your statement. Most card issuers report late payments to credit bureaus after 30 days of nonpayment. A single 30-day late payment can lower your credit score by 100 points or more, depending on your current score and payment history.
After 60 days, the late fee increases and your interest rate may jump to a penalty rate, which is often 25% or higher. After 180 days (six months) of nonpayment, the card issuer typically closes your account and may sell the debt to a collection agency. At that point, you owe the collection agency, not the card issuer, and the debt appears on your credit report as a charge-off.
Even one missed payment stays on your credit report for seven years. This affects your ability to borrow money, rent an apartment, or sometimes even get hired for certain jobs. The damage is real and long-lasting, which is why contacting your issuer before you miss a payment is so important.
Negotiating a settlement if you are in default
If your account has already gone to a collection agency, you may be able to settle the debt for less than the full amount owed. Collection agencies buy debt for pennies on the dollar, so they often accept 40% to 60% of the balance to close the account.
Before you offer money, get the settlement offer in writing. Do not send payment until you have a signed agreement that states the exact amount you will pay, the date by which you will pay it, and what will happen to your credit report after payment. Some agencies will agree to remove the debt from your credit report entirely; others will mark it as "settled" or "paid in full." The difference matters for your credit score.
If you cannot negotiate directly with the collection agency, a nonprofit credit counselor can do it for you. These counselors work for organizations like the National Foundation for Credit Counseling (NFCC) and offer their services for free or a small donation. They have relationships with collection agencies and often find better terms than you could alone.
Stopping collection calls and letters
Once a debt goes to a collection agency, you will receive calls and letters demanding payment. Under the Fair Debt Collection Practices Act, collectors cannot call before 8 a.m. or after 9 p.m., cannot call your workplace if your employer forbids it, and cannot harass you or threaten illegal action.
You have the right to stop collection calls by sending a written request to the collection agency. Use certified mail with return receipt so you have proof of delivery. The letter should state your name, account number, and a clear statement that you are requesting they stop contacting you. After they receive this letter, they can only contact you to confirm they have stopped or to notify you of a specific action like filing a lawsuit.
Keep a copy of the letter for your records. If the agency continues to call after receiving your written request, document each call with the date, time, and what was said. You can file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state attorney general's office.
Bankruptcy as a last resort
If your credit card debt is so large that you cannot pay it back even with a hardship plan or settlement, bankruptcy may be an option. Bankruptcy is a legal process that either reorganizes your debts into a repayment plan or eliminates them entirely, depending on which chapter you file under.
Chapter 7 bankruptcy can eliminate credit card debt completely, but it requires you to pass a means test showing your income is below your state's median. Chapter 13 bankruptcy creates a three- to five-year repayment plan and is available to people with higher incomes. Both types damage your credit score severely and remain on your credit report for seven to ten years.
Bankruptcy should only be considered after you have exhausted other options. Consult with a bankruptcy attorney who can review your specific situation. Many offer free initial consultations. If you cannot afford an attorney, legal aid societies in your area may provide free representation if your income qualifies.
Building a plan to prevent this in the future
Once you have addressed the when ready crisis, work on preventing it from happening again. Start by understanding how much you owe across all cards and what your minimum payments total each month. Many people discover they have committed more than they can actually afford to pay.
Create a budget that accounts for all your regular expenses plus your minimum debt payments. If debt payments exceed 15% to 20% of your take-home income, you are carrying too much. Consider whether you can increase your income, reduce your expenses, or both. A nonprofit credit counselor can help you build a realistic budget and may suggest a debt management plan that consolidates multiple card payments into one.
If you have a hardship program in place, use that time to build an emergency fund. Even $500 to $1,000 set aside can prevent you from missing a payment the next time an unexpected expense arises. Once your hardship period ends and your regular terms resume, keep making payments on time to rebuild your credit score.
Frequently Asked Questions
Will my credit score recover after I miss a payment?
Yes, but it takes time. A late payment stays on your credit report for seven years, but its impact decreases over time. After two years of on-time payments, the damage is much less severe. After five years, most lenders view it as less important. Paying all your bills on time going forward is the only way to rebuild your score.
Can a credit card company sue me if I don't pay?
Yes. If your debt is large enough and you have not paid in several months, the card issuer or a collection agency may file a lawsuit against you. If they win, they can garnish your wages or place a lien on your property, depending on your state's laws. This is another reason to contact your issuer or a credit counselor before your account goes to collections.
What is the difference between a hardship program and a debt management plan?
A hardship program is offered directly by your card issuer and typically lasts 3 to 12 months. A debt management plan is created by a nonprofit credit counselor and consolidates payments to multiple creditors into one monthly payment to the counseling agency, which then distributes it to your creditors. Debt management plans usually last three to five years and may lower your interest rates across all cards.
If I settle a debt for less than I owe, do I have to pay taxes on the forgiven amount?
Possibly. The IRS may treat forgiven debt as taxable income. If a collection agency forgives $5,000 of a $10,000 debt, you may owe income tax on that $5,000. Ask the collection agency whether they will issue a Form 1099-C, which reports the forgiven amount to the IRS. Consult a tax professional about your specific situation.
How do I know if a debt collector is legitimate?
Ask for the collector's name, the agency name, the original creditor, and your account number. Then contact your card issuer directly to confirm the debt has been sold to that agency. Scammers often pose as debt collectors to extract payment from people who do not actually owe money. Never give payment information over the phone to someone who called you.