The number one priority is taking care of your family that includes making sure they have a roof over their heads, food on the table, and money to pay all the utilities. Keep you car loan current so you have a vehicle to get back and forth to work. The credit cards should be the least of your worries.
You can call the credit card companies and ask to for reduced rates and reduced payments. They generally will not accommodate you if your payment is on time and your account is current. However, once you fall behind and talk to a collections representative, they will have programs to get you current.
I was surprised to see Suze Orman with her latest advice which I agree with. In these hard times if you don't have a big emergency cash fund, then pay only the minimum on your credit cards. This is advice I would recommend from Suze.
Suze Orman and the New Rules of Credit Card Debt
"If you have an unpaid credit card balance [and] not much saved up in emergency savings, I need you to listen up. My advice has changed. I want you to only pay the minimum due on your credit card balance, and instead, make it your top priority to build as much of an emergency cash fund as you can," Orman said on the program.
Telling her fans not to prioritize paying off credit card debt is quite a shocker since her focus has long been about getting out of debt. In her latest book, 2009 Action Plan: Keeping Your Money Safe & Sound, she dedicates an entire chapter on the subject. But Orman says that now, with the number of unemployed Americans rising, having an emergency savings fund is even more important than being debt-free. "The sad reality is that the credit card industry is taking actions to protect themselves with no regard to your needs or how good you have been in paying your bills on time," she said, referring to the fact that credit card companies have been lowering credit limits, increasing interest rates, and revoking credit cards altogether.
That means that many Americans could find themselves without any access to credit following a job loss, when they need it most. If someone finds themselves out of work and without a credit card, then Orman worries about her ability to put food on the table. That is why an emergency fund is key, she says. So instead of prioritizing paying of debt, Orman says that all spare dough--after making the minimum payments--should go into an emergency savings fund. Ideally, she says, that fund should contain eight months worth of living expenses.
While this approach makes sense for those living with little or no savings, consumers who already have a significant emergency fund should still focus on paying off credit card debt. That's something Orman, along with other financial experts, really emphasize. For those with rainy day funds large enough to last eight months, these more familiar rules still apply:
If you are just in over your head and can't take the nonstop calls you get from your credit card companies, then you should explore bankruptcy as an option. Yes, your ego may hurt, but you should put this aside for the sake of taking care of your family. You don't want to become a casualty of the recession/depression we are in and become homeless on top of being unemployed.