Hardship Program Advice - The Bills.com Blog

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Hardship Program Advice

Question: I have a credit card balance of about $2400. The minimum payment is over $600 because i have not been able to pay on it in over 4 months. I still am unable to pay on it. Is there anything i can do or that the credit card company can do for me?

Answer: There are several possible solutions to your predicament, but which one is the best for youdepends on several considerations, including your income, your balances, your interest rates, and your creditors. Since, in your particular case, you owe a small total amount I think that your best course of action is to just call your credit card lender and ask to be placed on their "hardship program" and state that you want to keep making payments but you would like the account to be re-aged and the interest rate reduced so that you can get back on track.

If, however, you decide that you want a more aggressive solution and want to seek help, then you have 3 primary credit card debt resolution options.

If you own a home, a secured debt consolidation loan may be right for you. Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at:
Mortgage Refinance Quote

If you have sufficient income to pay more than your monthly minimums, you may be able to pay off your accounts through planned repayment. First, you should carefully review your finances to cut expenses wherever possible, to free up as much cash as possible to apply to your debts. While you will continue to make the monthly payments on all of your accounts, you will pay all excess cash to your highest interest account to pay it off as quickly as possible. Then do the same with your next-highest interest card, until that account is paid off. Continue this process until you have succeeded in paying off all of your credit

cards. Depending on how much above the minimums you can pay each month, this method may rid you of your debt in a matter of years, save you thousands in interest, and preserve your good credit history. If you cannot afford to pay any more than your minimums, you may want to seek the assistance of a professional organization, such as a debt settlement or credit counseling firm.

CCCS companies offer numerous services, such as financial counseling and budget planning, as well as Debt Management Plans (DMPs). In a DMP, the CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. There are several drawbacks to CCCS, though. First, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. Second, it is likely to have a negative impact on your credit score, so you may not wish to enter into a DMP if you anticipate any large purchases, such as home or an auto, in the near future. Third, the average DMP takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.

The second option to consider is the services offered by debt settlement firms. Rather than making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts by 50% to 60%

of your principal balances. These programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. In many cases they can also reduce your monthly payment toward your debt. There is one major drawback to debt settlement programs, though–they will significantly damage your credit while in the program and for at least a year or two afterwards. However, if you are currently unable to afford to pay your creditors, the hit to your credit may be worth the benefit of riding yourself of credit card debt.

Very quickly, if you want to apply for help with one of Bill's approved debt help partners, click here:
Debt Relief Savings Quote

I encourage you to explore the Debt Help section of Bills.com at http://www.bills.com/debt_relief

There, you can learn more about the options I have described above. Hopefully one of the three options I have described about will improve your financial situation.

I hope that this information will help you Find. Learn. Save.

Best of luck,

Bill
www.bills.com

ps-
These are a few of the considerations. If you would like more information, please visit our debt relief boot-camp at:
http://www.bills.com/debthelparticle2

We hope that this helped you to Find, Learn, & Save!

Also, make sure to get a free financial health check-up with Bills IQ!

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User Comments

1. Posted by Maury on Tuesday 2nd December 2008 07:42

Check out this article I wrote and see if it helps you out!

2. Posted by pat bowen on Tuesday 16th December 2008 11:42

a friend told me about a new bill just passed about getting a harship form from gov. for debt...heard about it? where to go to get form..i need it

3. Posted by Bill on Tuesday 16th December 2008 11:50

I am not aware of any such program.

4. Posted by Darlisa Meger on Monday 9th March 2009 12:41

I suggest calling your CC company if you have been laid off, and or change of income, and let them know your situation as it stands. If you stop making payments, because you have no finances to do so, they will work with you. I got a 6% interest until paid off, and I can pay more if I can afford it, but there is a catch, don't be late on your set up payment date, or drop out of the program, because they will hike up the interest again. It is basically a 2nd chance program. Just think of all the thousands of dollars in interest you will be saving. I believe it will affect your credit rating, but if you missed any payments in the beginning with your credit card, it is already marred.

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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