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I recently became disabled, but I have credit card debt. What are my options?

By , CardRatings Contributor

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I'm sorry to hear about your situation. It's frustrating enough to work through health challenges without also having to worry about your finances. You're not alone. According to the Social Security Administration, roughly one out of four healthy American workers in their 20s will become disabled before they reach retirement age. As many as 5 percent of American workers receive disability benefits every year, and more than a third of disability cases last five years or longer.

However, a disability or a medical condition doesn't eliminate your debt. If you were spending money and using your credit cards with the expectation that you'd keep a stable income over the next few years, you're probably staring at some daunting financial statements.

Don't panic.

No bank wants to harm you, seize your property, or garnish your wages unless they have no alternative. Even though your disability benefits are protected from garnishment, your home, your car, and even a spouse's income could be at risk if you fail to communicate with your creditors. Follow these steps to protect yourself and your family:

1. Make a clear list of every debt you owe. With everything you're going through, it's easy to lose track of a bill or a creditor. A spreadsheet will help you monitor every relationship with your banks, but even a comprehensive list on paper can keep you organized. Use a credit card payoff calculator to help put your payments into perspective.

2. Call each credit card issuer on your list and ask for a specialist who handles hardship repayment programs. "Hardship" is an industry code word for your situation. Instead of having to tell your story to multiple customer service agents, you can skip right to a person who's empowered to help. Participating in a credit card hardship plan will mean giving up the use of your account, but it will almost always result in a significantly lower interest rate while slashing your monthly minimum payments. Some credit card issuers may even offer you a period of deferred payments, or a credit against finance charges you paid in the past.

3. Roll your payments into a "debt snowball." Make a list of all your debts, with the lowest balance at the top. Figure out the maximum you can afford to apply to your debt from your monthly budget. After clearing all of your minimum payments, throw the remainder at the card with the lowest balance until that card is paid off. Then you move on to the next-lowest balance. As you knock out each account, you'll make faster progress against the rest of your debt.

Communicating regularly with your creditors can prevent them from sending you to collections or considering you for a lawsuit. If you're in truly dire straits, consider a free advisory meeting with a bankruptcy attorney. Dealing with your debt may not feel good, but it beats the fear of a looming judgement that could cause even more damage to your credit and to your mental health.


  1. Jerry February 01, 2019 - 5:03 pm
    I have recently started receiving Social Security Disability. Can I pay my credit cards bills, utilities, car repairs, rent with the money I get. The pamphlet is confusing. I am living with my parents and in order to live there they would like me to at least pay the utility bills. Is that allowed?
      Reply »  
    1. Brooklyn Lowery February 01, 2019 - 8:25 pm
      While I'm not an expert in social security benefits, my understanding is that your funds can be spent however you choose, whether on utilities or credit card payments or something else. I'd recommend calling the social security assistance line if you still have questions. Thanks for reaching out.
        Reply »  
  2. Jackie July 25, 2018 - 2:31 pm
    I%u2019ve tried this and my card company has declined me 2x now is there any other way to get help
      Reply »  
    1. Brooklyn Lowery July 26, 2018 - 6:08 pm
      I'm not exactly sure what you mean by "I've tried this," but here are a couple of things to consider: Are you legally disabled? As in, have you filed for and been approved for Social Security disability? If so, you'll want to have that information ready when you contact your credit card company.Secondly, what exactly has your company "declined" you for? The steps outlined in this article are NOT steps to have your debt erased by the credit card issuer; rather, they are steps so that you can work out a payment plan with your issuer and repay the debt you owe given you financial circumstances. Make sure when you call that you are asking for the right thing and not simply for the debt to be forgiven -- you're unlikely to find a company that will just erase the debt altogether.
        Reply »  
  3. Eric Olsen April 13, 2018 - 10:12 pm
    The straightforward answer is you don't have to pay the debt. Disability income is protected. People go on disability for a reason. Going back to work is rarely an option and disability income is minimal. It leaves nothing to pay any old debt. The statement in the article, "your home, your car, and even a spouse's income could be at risk" is about the same as saying you could be hit by meteorite if you walk outside. Credit card companies will never sue a spouse who is not on the card. Credit card companies if they get a judgment never go after assets like a car. A judgment might become a lien on a home but they never take steps to foreclose on the lien on a house probably protected by a homestead, instead hoping to get paid someday, perhaps when the home is sold. Bankruptcy is probably not necessary because the income is protected and couldn't be afforded anyway. A cease and desist letter can be sent to stop unwanted collector contact. Finally do you think you will get a straight forward answers from a website that advertises for and is supported by income from credit cards? Would they tell you not to pay the credit card? Think about it.
      Reply »  
    1. Brooklyn Lowery April 26, 2018 - 3:47 pm
      Thank you for submitting your comment; however, I respectfully disagree with your assessment. The article presents an accurate outline of what happens and the steps to take, beginning with the fact that your debt will NOT be automatically be erased if you become disabled and you are legally still responsible for paying it. While it is true that a credit card issuer can choose not to pursue that debt (that's the case whether you're disabled or not -- it's always up to the issuer whether to pursue the debt), that is a gamble. If your gamble doesn't go your way and the issuer does decide to send your debt to collections, that can set off an unpleasant chain of events that most people would prefer to avoid.The steps the article's author outlined are the safest, most appropriate steps to take. Simply avoiding the debt will NOT make it go away. Furthermore, even if a credit card issuer chooses not to pursue your debt, you can be sure that your failure to pay will be reported to the credit bureaus, meaning your credit score will take a significant hit. Your score will only continue to decrease as you continue to miss payments and interest accrues on your unpaid balance. In the long run, that decreased credit score and tarnished credit history could (and likely will) mean difficulty securing a car loan, mortgage or any other line of credit you may need in the future.
        Reply »  
      1. Louise May 12, 2018 - 4:50 am
        What if the persons only means of income is SS? Has no assets except a 2009 car that is paid for, and 4 yr old furniture? Can the car be seized? I live in PA.
          Reply »  
        1. Brooklyn Lowery May 14, 2018 - 8:22 pm
          I'm not a lawyer, so please do consult one for final information, but this is my understanding: Credit card companies cannot seize any property without a court judgment, which means they would need to sue you for the debt before they could collect anything. Assuming a court decides in the credit card company's favor (assuming you do in fact owe debt in your own name), any real property you own could be seized by the credit card company (there are some exceptions on a state-by-state basis). They cannot garnish your SS income, but they could go after any funds you have that you cannot show were from SS.
            Reply »  
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