Suppose you are not in a position to pay a bill; in that case, you might think that it’s better to make partial payment than not paying the bill at all. However, your payment is still considered to be a late payment, and any late payment greatly affects your credit. Moreover, you would need strong claims to convince your creditor.
If you have decided to pay less than the minimum payment due, contact the creditor earlier to inform. You can ask for either making a partial payment without late fees or skipping a payment, or changing the due date. Make sure that any payment you choose will not be recorded as late payments by them. You can also check if they offer hardship programs.
Things to keep in mind
As soon as you get approval for partial payment, you should start preparing for the new schedule given to you. If you delay it every month in the new schedule, you will be reported late every month. This will affect your credit more than not paying it all at once.
You need not explore the partial payment option only when you cannot pay them. If you have too many financial commitments, you can prioritize some payments over others and spread your funds.
Different types of debt and how you should be prepared
Mortgage
After 90 to 120 days past the due date, you will lose your home because of foreclosure.
Auto loan
Your vehicle will be repossessed after one day past due (some may wait for 60 days), followed by a gathering of unpaid debt.
Federal student loans
After 270 days, you will face wage garnishment, tax refund seizure, and partial seizure of Social Security benefits.
Private student loans
After 30 days, you will face a lawsuit and wage garnishment.
Credit cards
After 180 days, the account will be charged off and sold to collections.
Collections accounts
You don’t have a fixed time period after the due date for collections accounts. Practically it depends on the amount and the collector. Each one is different. You will face a lawsuit and wage garnishment.
Tax debt
You will receive a notice demanding payment from IRS. After ten days of the first notice, you will receive a wage garnishment. Your property or bank account will also be seized.
Child support
Your driver’s license will be suspended. You must also be prepared for property liens, tax refund seizure, wage or benefit garnishment, passport revocation, or even jail. The number of days you are safe after the due date depends on the state.
Medical bills
Your account will be turned over to collectors. The number of days you are safe after the due date depends on the provider.
Credit score
Partial payments will have a negative effect on your credit score. Even though the creditor might accept the payment, it will be reported as missed or delinquent when you don’t pay the minimum amount. Late payment will be on your credit report for 7½ years. If you are unfortunately stuck in a long-term problem and know that you cannot make partial payments on time, you must check out debt relief options.
