If you’re like many other people struggling with the current economy, you may have suddenly found yourself buried in credit card debt. This is easy to do if you’re trying to cope with reduced income. If you’re struggling to make your minimum payments, or you’re missing them and racking up late fees, it’s time to take action.
There are four varied plans to getting help from your credit card company, and they are explained below. Each of these options requires a credit card hardship letter.
Option 1: Credit Card Debt Settlement
This route is not available to many because it necessitatesthat you have considerable savings that you can pull from . The idea is that you can convince your creditor to take a partial lump sum payment of your debt and to negate the rest.
For instance, you may owe $15,000 on a credit card, so you encourage 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 close to bankruptcy, in which case, they would lose out. Better to get $7,000 from you than $0.
However, in order for it to be a viable option for you, you need to have money sitting there to give them, as soon as you reach an agreement. The lump sum amount you negotiate can be anywhere between 25-60% of what is owed.
The other downside so the settlement option is that you will owe taxes on the portion of your debt that is forgiven. The IRS categorizes this as regular income, and as such you will have to pay tax on it.
Option 2: Negotiating a Lower Interest Rate
If you have made payments reliably up until very recently, then this could be a viable 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 decreased quite significantly.
In addition to petitioning a lower interest rate, you can also request tha the creditor forget various fees that have been charged to your account, especially any tardy payment fees. While some companies will agree to this and others have policies against it, there are no negative effects for asking.
Note:I can help you pursue this option by constructing your credit card hardship letter.
Option 3: Negotiating a Payment Plan
This option is most available to 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 obviously really struggling, your creditor may be willing to work with you to compose a payment plan that works for you.
Again, if you’re already proving to be a credit risk, they would rather get something from you than nothing, so they’ll be desirous to construct a plan that works for you.
Option 4: Having a Professional Negotiate on Your Behalf
If, for whatever reason, you can’t figure out which of the above avenues 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 should be certain that the company you pick is legitimate and reputable. As with other financial situations, there are plenty of scams to avoid.
Note: Even if you work with another company, you may be asked to create hardship letter describing your struggles. Becky DeGrossa has helped many people with their hardship letter writing.
