Hardship Program Advice

I have a credit card balance of about $2400. The minimum payment is over $600. What can I do?

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Bill's Answer: Answered by Bills.com Staff

There are several possible solutions to your predicament, but which one is the best for you depends 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 various credit card debt resolution options.

Option #1: Debt consolidation loan

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 the Bills.com mortgage refinance savings center.

Option #2: Repayment Plan

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.

Option #3: Professional assistance and services

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.

Option #4: Debt Settlement

The last 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 afterward. 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.

If you want to apply for help with one of Bill’s approved debt help partners, visit the Bills.com debt relief savings center.

I encourage you to explore the Debt Help section or the Debt Relief Boot-camp at Bills.com.

There, you can learn more about the options I have described above. Hopefully one of these options I have described will improve your financial situation. One option I did not mention above is a hardship loan. I did not recommend this option because adding more debt in your situation is not wise. For the sake of completeness I mention this option now.

I hope this information helps you Find. Learn & Save.




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Comments (10)

Eva A.
New York, NY  |  December 27, 2010
Debt Release
Lisa R.
California City, CA  |  December 09, 2010
i think you have to talk with your cc company to solve this problem , you can negotiate with them may this can solve your prob.
September 27, 2010
Mr. Screwed. Even though HSBC and Discover were of no assistance in providing you assistance through a hardship program, you may want to see the counsel of a debt resolution firm that works with consumers in a financial hardship. You can review our article on one Debt Relief Provider here. Also, see the Bills.com resource Debt Negotiation and Settlement Advice to arm yourself with tactics and strategies for dealing with the collection agent. Good luck and hang in there. Bill
I M.
September 27, 2010
HSBC Discover was absolutely NO HELP whatsoever. They absolutely refused to lower my interest rate and sent me around and around with different 800 numbers only to find ultimately they wanted me to go through some outside agency. I lost my job! I should be onb a hardship program. Nope. Not through HSBC. They want you to fall on your face before they'll even consider helping you. I hate credit card companies.
Mike C.
July 13, 2010
Good questions. I found myself in a pretty bad situation too, and credit card counselingwas the answer. I researched several companies. They really did make the experience easy. Now I'm on my way to financial recovery. Good luck.
Sabrina .
July 12, 2010
I tried a debt solution company. The best way to describe it was financial surgery. Intitally they didnt not promise me alot of fluff and "sound to goods to be true" crap (been there done that, didnt work.) I think the reason most people decide to go with settlements last is because they are afraid of the credit score coming down for abit. But my FICO score was doing nothing for me anyway! Two years later I am debt free, my score has been restored and my credit worthiness excellent. {advert link removed}
Darlisa M.
March 09, 2009
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.
December 16, 2008
I am not aware of any such program.
Pat B.
December 16, 2008
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
Maury .
December 02, 2008
Check out this article I wrote and see if it helps you out!
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