What to do if you can’t pay your credit cards

What to do if you can’t pay your credit cards? Back in 2013 I was really going through some tough times I thought. I had been audited by the IRS and had a big bill to pay the government. I had about 40K in credit card debt. I took a pay cut at my job and I just couldn’t afford to pay everything. I read James Altucher’s book, ‘Choose Yourself’. He mentioned how he lost everything and basically said fuck it until he got back on his feet.

After finishing the book on July 4th 2013. I immediately emailed him for advice. He responded back within 15 minutes with the following advice. It was the best advice I ever received, even if I did get sued by several Credit Card companies for following his advice.

On Thu, Jul 4, 2013 at 5:46 PM, Ron’s Gmail wrote:

Hey James,

Nice book you wrote. I really like what you had to say. I start choosing myself a few years back, but this book really opens my mind to more choices I should be looking at. I should be creating everyday.

I got a quick question for you. What would you do if you couldn’t pay your unsecured debt? Over the last few months I have stopped paying my unsecured debt which add up to about 40K. I would pay it if I could, but I got to keep the roof over the family’s head first. Bankruptcy isn’t an option at this time. To be brief, paying back the IRS and trying to provide for my family on a lower income has got me strapped. I take full responsibility for my actions and I’m not blaming anyone except myself. I’m just curious. What would you do?

Again….Great book.

Thanks,

Ron

From: On Behalf Of James Altucher
Sent: Thursday, July 04, 2013 6:02 PM
To: Ron’s Gmail
Subject: Re: Nice Book – Choose Yourself

I would not pay back the debt. I would build up the idea muscle until opportunities starting coming in. Then I would start paying down the unsecured debt over time.

This, in fact, is what I did when i was dead broke and owed hundreds of thousands.

Ron’s Gmail
Jul 4, 2013, 6:45 PM
to James

Thanks for your advice bro. I’m going to use it.

Over the next year. I was sued by several credit card companies that actually served me at my home. The others didn’t bother to sue but they kept reaching out about there money. My credit score dropped down below 600. I couldn’t get credit for anything. I immediately dealt with the companies who sued me. Taking the advice I found in ‘Negotiate & Settle Your Debts’ I sent written letters to the companies about how much I could pay. They countered and we met somewhere in middle. I was able to lower the amount I had to pay back by 60%. The path I took was a tough one for me. I believe in paying my debt back. I learnt a lot from the situation.

1. Don’t accumulate 40k in unsecured debt (Credit Cards and Loans)
2. Don’t stress yourself out over bills. You can make yourself sick by stressing.
3. You can negotiate the amount you pay, but usually only after the debt has been handed over to a Law Firm. The Law Firm will sue you, but they will take less than half the debt owed.
4. Some credit card companies will not even waste their time coming after you. They will turn it over to collections and that collection company may or may not contact you.
5. If you decide not to pay. Don’t pay the debt until you get sued. In my case it was much easier to negotiate with the firm that purchased the debt.
6. it’s not the end of the world. You will feel like a piece of shit. Learn from your mistakes and move forward.
7. After you pay back your debt, don’t run it up again.
8. Your credit score will go back up and all the credit card companies will be trying to give you credit once you repay the debt. Fast Forward to 2020; my credit score is over 760 which a true blessing and I’m very grateful.

It took me about 3 – 4yrs to pay back the debt. I worked my full-time IT Job plus other jobs and side hustles (online business, rideshare driver selling on eBay/Amazon and Real Estate Notes Broker). I used every spare dollar that I received to get out of debt. It’s now 2020 and many people will not be able to pay their bills due to COVID-19. Credit Card companies will probably work with you know. If they decide not to work with you, don’t sweat it. You will be okay, just take the cards dealt and play the hand correctly.