What to do if you can't pay back your credit card debts!

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Suppose you've realized that you have more credit than you can handle. What are the best strategies to help protect your credit over the long term?

1. Look through your spending and try to curtail spending on nonessential items. Examples vary among individuals and could range from cell phones, to extra automobiles, to clothing, or dining out. You could analyze ways to increase your income by working extra hours or working a second job on the weekends. Hopefully, these will go a long way in helping you pay your bills on time.

2. The next step is to call your creditors. Creditors value your proactive contact. At the minimum, respond to phone calls or letters from American Express® and other creditors. Explain your inability to pay—serious illness, loss of a job, etc. In many cases, you may be able to work out an arrangement with creditors to adapt your payment schedule to allow you to meet your credit responsibilities.

If you have a good credit history with the company and maintain your communication, a creditor may be much more likely to try to reach a solution. Ignoring phone calls or letters from creditors indicates an unwillingness to honor your obligation to pay and is not a useful strategy to protect your credit. If for some unexpected reason you cannot fulfill the agreements you made, call the creditor again and explain the situation. Honesty is the best policy when it comes to managing credit problems.

AMEX