When financial avalanches hit, you may have no choice but to stop paying on your credit cards; however, you may also not be able to file for bankruptcy. This may happen if you recently lost a well paying job and have to wait it out a few months to financially qualify for Chapter 7 bankruptcy or if you want to begin paying on your cards again once you find a new job. There are a few ways that you can stop making payments on your credit cards, while avoiding bankruptcy at the same time.
Ask for Deferment
If you have been paying an additional fee for a hardship protection plan, this is when it will finally pay off. Many cards offer a protection plan that will allow you to defer your payments if you lose your job, until you find a new one. Some plans, like the Chase Protector, allow you to defer your payments for up to two years if you are still unemployed. If you are not covered by one of these plans, it may help to call and explain your hardship situation to the company's representatives. They may have the authority to give you a payment extension and possibly even a short deferment.
Negotiate Settlement
Although you will still make one final payment on your credit cards with this option, once that payment is handed over, you will be done with them. According to Bankrate, the first step to negotiating a settlement is to stop paying and save the money, so that you have leverage to negotiate with. Then tell the company that you can only do a settlement or bankruptcy. They will try to sell you on a payment plan, but just remain firm about the settlement. Eventually, as your account gets closer to being charged off, the company may fold and give you your settlement. Just make sure to get it in writing on their letterhead and save it with a carbon copy of your payment check.
Just Stop Paying
There is only one way to completely abandon your repayment obligations and not file for bankruptcy, and that is to just stop paying. This comes with four major drawbacks. First, you must dodge collectors for several years. Second, you must also hope that the company does not file a lawsuit against you before your state's statute of limitations on debt lawsuits runs out. Third, if they do file suit and get a judgment, they may be able to garnish your wages and take money directly from your bank account. Fourth, it will also tarnish your credit report for the next 7 1/2 years.
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