You owe a lot of money on your credit card. Maybe you had some unexpected bills that you had to pay, and charging them to the card was the only way to do it. Perhaps your spouse has been spending frivolously. No matter how it happened, you realize that you’re not going to be able to pay off what you owe.
You decide that it’s time to close down that line of credit. If you call and cancel the card, do you still have to pay back the remaining balance?
You do still have to pay off that current balance
Unfortunately, closing down your line of credit doesn’t eliminate what was already owed. You still have to pay off whatever was on the balance when you decided to close the card.
The good news is that you may not have to do it all instantly. You don’t have to pay the balance just to be allowed to close your account. You may still have the option to pay the minimum payment.
This is not always a good option, however, as the interest that you’re paying on the outstanding balance can be more than the minimum payment that you’re making. This just means that your debt is going to increase over time, even though you have closed your account and you’re no longer spending on that credit card. That can put you in a far worse financial position than you were before.
So what should you do?
If you’re facing debt that you have no other way of escaping, then it’s time to take a look into all of your legal options. For instance, you may find that Chapter 7 bankruptcy gives you the ability to eliminate that debt.