Last time I talked about what happens if you can't pay your credit card, and how you can get your budget under control. Once you've figured out how much you can spare each month to pay down your debt, even if it's only a little, now comes the hard part: calling the credit card company and seeing if you can work out a compromise or a payment plan to get some debt relief.
It's hard, but you can do it if you plan what you'll say. You might be surprised how they'll be willing to work with you.
When you call the credit card company to ask for debt relief, the goal is to sound honest and fair. You're asking them for a favor--a lower interest rate, lower payments, waiver of late fees, whatever. There's no need to grovel, but they've also heard their share of angry, hostile creditors, and let's face it, if you work the phones all day at a credit card company, you'd rather spend time helping a nice, polite person than dealing with an angry one.
When you call, first find out who you need to talk to. The first live person may not be able to change the terms of your card, but they can transfer you to someone who can or to a supervisor who can eventually get you to the right person.
Points to Cover
When you reach a person who can help, explain what's changed with your financial situation. Have you been laid off, had a major illness, or needed to go on disability? The goal isn't to tell a story to gain sympathy. Instead, you're trying to help the credit card company understand the severity of the problem. If you've been laid off but expect to find another job in the next few months, that's a different situation than if you're suddenly disabled and narrowly avoiding bankruptcy. It also helps to have an idea of your rights as a creditor.
Then suggest a solution. Since you've figured out how much you can pay monthly now, even if it's less than the minimum payment, suggest paying that amount. If you can pay almost nothing now but think you'll be able to pay more later, explain that. Say you expect to have another job soon, or to get an insurance settlement, or whatever. If you're worried that bankruptcy is a real possibility, mention it, since the credit card company knows it may get nothing if that happens.
Offer to send whatever information the credit card company needs to prove that you're telling the truth about your current situation.
If they agree to accept lower payments, see if they're willing to waive late fees, since you're making a good-faith effort to pay. They might also be willing to reduce the interest rate.
They'll probably close your card to any new charges, but that's not a bad thing. The last thing you need to do is add more debt now. If you've been responsible with debt in the past, though, that might help your case, so be sure to remind the representative that you have a good record of timely payments until the current problems began, if that's true.
This kind of thing is incredibly difficult to do. That's why people pay big bucks to debt relief places, to handle it for them. But if you can do it yourself, you'll save the cost of paying someone else to do it, and can stay in control of your own finances.
It's Just Business
When you're on the phone with the credit card rep, stay calm. Remember, this is just business to them. It may help to secretly pretend it's just business for you, too, as if you're negotiating on behalf of someone else, even though you're talking about your own problems. As much as we'd all like to think they'll cut you slack out of the goodness of their hearts, the real reason is they think it's the easiest way to get the most money out of you. So pleading or crying won't help, but explaining honestly how few assets you have and how little income you have, and offering to send proof of it, will scare them into thinking it's better to get a little now, than risk getting nothing if you declare bankruptcy.
If the credit card rep doesn't agree to what you ask for, see if they're willing to make a counter-offer. Or ask politely if there's someone else you could talk to who might be able to help.
If you have success, get the name and phone number of the person you spoke with, and ask to have the agreement confirmed in writing, or ask for the correct mailing address and follow up with a letter yourself, outlining what you agreed to.
Then make the payments you've agreed to. If your financial situation changes, keep in touch with the credit card company. If you receive a lump sum payment, such as an insurance settlement, and it's enough to pay some of your debts but not all of them, see if your credit card company would be willing to settle and declare your debt paid in full, if you pay them a lump sum that's less than the full amount.
Calling and talking to your credit card company isn't guaranteed to work. They may simply not want to compromise at all. But since it costs only some time (and, unfortunately, some mental wear and tear), it's worth a try.
7:32 p.m. April 5
Can you get a lawyer or somebody to do this for you?
9:14 p.m. April 5
Sure. There are debt relief companies and credit counselors that will help you figure out a budget, negotiate with your creditors and take your debt collectors' calls for you. Some are legit, especially the low-cost nonprofit ones, and some are in it just for the money and not so much to offer genuine help. Check out this article on debt management plans and how to avoid credit repair scams.
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