Member Blog Post

If you're like many other people struggling with the current economy, you may have suddenly found yourself worried about credit card debt. This is easy to do if you're trying to survive with little or no income. If you're desperate to make your minimum payments, or you're missing them and racking up late penalties, it's time to do something.

There are four different options to getting help from your credit card company, and they are explained below. Each of these avenues require a credit card hardship letter

First option: Negotiating a Lower Interest Rate If you have made payments reliably up until very recently, then this could be a attractive option for you. You will need to explain your hardship, and encourage your creditor that you will be able to make reduced payments. However, when creditors lessen interest rates, the payments can be reduced quite drastically. In addition to petitioning a lower interest rate, you can also petition tha the creditor waive various fees that have been charged to your account, specifically any tardy payment fees. Some companies will do this and others have policies against it, but it doesn't hurt to ask. Note:I can help you pursue this option by constructing your credit card hardship letter.

Second option:Credit Card Debt Settlement This route is not available to many because it necessitatesthat you have significant savings that you can use. The premise is that you negotiate with your creditor to take a fraction of your debt and to forgive you the rest. For instance, you may owe $15,000 on a credit card, so you get the lender to agree that you'll pay them $8,000 if they forgive the $7,000 remaining. They would write off the $7000 as a loss for their business. The reason this might be attractive to your creditor is that if you are struggling this much, you're most likely flirting with bankruptcy, in which case, they would not get anything. Better to get $7,000 from you than $0. However, in order for it to be a desirable consideration for you, you need to have the money sitting there to provide them, immediately upon reaching agreement. The lump sum amount you agree upon can be anywhere between 25-60% of what is owed. The other drawback to the settlement option is that you will owe taxes on the portion of your debt that is waived. The IRS categorizes this as regular income, and as such you will have to pay tax on it.

Third option: Negotiating a Payment Plan This option is agreeable for you if you don't have a good payment history with your creditor, strangely enough. If you're few months behind in your payments, and are clearly really struggling, your creditor may be willing to work with you to create a payment plan that works for you. Again, if you're already suggesting that you are a credit risk, they would rather receive something from you than nothing, so they'll be motivated to create a plan that works for you.

Fourth option: Having a Professional Negotiate on Your Behalf If, for whatever reason, you can't choose which of the aforementioned options are a good fit for you, you can turn to a professional to take on your case and negotiate with your creditor on your behalf.

There are myriads of credit card counseling services. Simply you have to be certain that the company you choose is legitimate and reputable. As with other financial situations, there are myriads of scams to avoid.

Note: Even if you work with another company, you may be asked to create a credit card hardship letter describing your situation.