A big topic in the credit card and debt relief world over the past couple of years has been credit card hardship programs. The reality is, as a result of the financial recession that we all faced, many consumers are now dealing with overwhelming credit card debt. Although the economy may be slowly getting better around them, with such high minimum payments, it doesn’t feel like it’s getting any better. Therefore, looking for assistance, tons of consumers have found credit card hardship programs but…

Too Much Credit
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What Are Credit Card Hardship Programs?

As lenders watched more and more consumers fall into financial hardships, many of them felt inclined to do something to help those in need. Several lenders started to develop financial hardship programs designed to help consumers facing hard times with getting out of debt. Although all credit card hardship programs are different, most of them have a few things in common. In most cases, you will need to close your credit card account to qualify. If you prove your financial hardship (Which I will show you how to do later!), you will generally be granted lower interest rates and structured payments designed not only to meet your budget but, to get you paid off within 5 years or less.

So, Do You Want To Know How To Set Up A Credit Card Hardship Program?

Step #1: Get Ready: As with anything in life, when it comes to setting up a credit card hardship program, it is imperative that you take the time to prepare. All you will need to do is make a few lists. Here’s a good preparation checklist:

  • Make A List Of All Household Income – In this list, you should include your salary from work, any rental property income, side work income and any other income you can think of with the exception of child support or alimony.
  • Make A List Of All Household Expenses – This one is for all of your expenses and, I mean ALL of them. Think of any monthly expense that you have including rent or mortgage, utilities, food, gas, car insurance, home insurance, health insurance, day care costs, secured loans such as auto, motorcycle and boat loans, unsecured loan payments like signature loans, medical expenses and anything else you can think of that you pay for on a monthly basis.
  • Make A List Of All Credit Card Debts – Finally, make a list of any credit card debt that you have. This list should include issuing lenders, account numbers, customer service phone numbers, balances, interest rates and pay to addresses. It is best to order this list from highest interest rate to lowest.

Step #2: Start With Your Highest Interest Rate: Starting with the credit card that charges you the highest interest rate, you should call the 1-800 customer service phone number. Once you are asked what they can help you with, explain to the representative that you are currently experiencing hard financial times and ask if they offer financial hardship programs. In most cases, the answer will be yes. Using the information that you gathered earlier, simply answer all the questions the representative asks. If your financial hardship is deemed to be legitimate and to the extent that would require assistance, you will generally receive lower interest rates and a structured payment plan that will help you to get out of debt!

Step #3: Rinse And Repeat: If you have multiple credit cards and, you are truly facing a financial hardship, don’t stop with one credit card! Contact all of your lenders from highest to lowest and follow the instructions in step two. You will be amazed at how much some lenders are willing to help!

Things To Consider About Credit Card Hardship Programs

  • This Could Harm Your Credit: One thing that you should consider before applying for a credit card hardship program is that these programs may harm your credit. The reality is, a portion of your credit score is based on your available credit. As your available credit is lowered, so is your credit score. On the other hand, if you have spent more than 75% of your credit limit, chances are, you have already harmed your credit and the effects will not be hard to recover from!
  • Credit Card Hardship Programs Are Not For Everyone: Everyone who is experiencing a financial hardship has a very unique situation. How they got into the position they are in, how they react to it, their ability or inability to pay their debts all play a crucial role when it comes to choosing a debt relief option. Before ever considering any debt relief option, I always suggest speaking with a professional credit card debt consultant.
  • Don’t Miss Payments, You Can Get Kicked Out: When you sign up for a credit card hardship program, the lender is so willing to work with you because you show a need, want and desire to pay your loans back. However, missing payments may show lenders that you are no longer serious about paying your debts and can cause you to get kicked out of the program. In some cases, you may not be allowed to reapply!

My name is Joshua Rodriguez and I am a proud partner in ownership of CNA Finance and have written several publications on this topic.

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