How to Handle a Debt if You Don't Have Money to Pay

Being in debt without the money to pay puts you in a difficult position. There is little to do except hope the creditor or debt collector does not file a lawsuit. If that happens, it could result in a court judgment for the entire amount and possible garnishment of your bank account or wages. A debtor with no money to pay the debt should create a strategy for eventually resolving the debt -- while preparing for the possibility of a lawsuit.

Instructions

1

Call the lender. Original creditors such as a credit card company or mortgage lender may offer special programs to help customers through temporary hardships. Explain why you cannot pay and ask the creditor to suspend payments for a few months while you work though an illness, job loss, family emergency or some other setback. Provide the creditor with any information necessary to qualify for help, such as confirmation of unemployment or a hospital stay. A suspension of payments for a few months isn't a long-term solution, but does buy some time.

2

Contact the debt collection agency if the debt is no longer being managed by the original creditor. Tell the collection agency you would like to settle the debt eventually, but cannot settle now. Debt settlement allows you to resolve a delinquent debt by paying less than the full balance, usually in a lump sum. Tell the debt collector that you're willing to keep in touch each month with an update, but that you simply cannot make any payments currently.

3

Respond to any court notices about a debt that you cannot afford to pay. Your failure to show up in court can result in an automatic court judgment in favor of the creditor or debt collector, and that could lead to garnishment of your bank account or wages. You may still lose if you show up for a court hearing, but a judge sympathetic to your situation may instruct you and the debt collector or creditor to enter into mediation aimed at a resolution.

4

Consult with a bankruptcy attorney if the debt is a major debt such as your mortgage and you are facing foreclosure. Bankruptcy won't allow you to continue missing mortgage payments and still keep the house, but it can stop the foreclosure process for a few months while you try to work something out with the lender to bring your account current.