Whether you are dealing with post-holiday credit card debt or the usual accumulation of bills, the debt load can seem unmanageable, and the prospect of bankruptcy can be daunting. Not surprisingly, there are steps that you can take to manage the debt and the mounting penalties and interest charges that accompany high, unpaid balances.
The country experienced its first-ever trillion-dollar holiday season. Working families and independent contractors, as well as adults and seniors with medical issues and recent college graduates, essentially any one of any age, at any time could experience what appears to be insurmountable debt at some point in their lives.
Bankruptcy is not the first and only option available. Begin with negotiation. It is often possible to negotiate terms, interest rates, and payments on credit card debt. You can also try to negotiate a settlement of the amount you owe. The steps you take and the options available depend on your situation and on the credit card company that you are dealing with at the time.
Timing is a key factor in determining your negotiating strategy. If you are not struggling with your payment, you might be able to get a better interest rate. If you are struggling you might be able to get better payment terms or dates, or perhaps a short reprieve from payments. Unexpected illness or a brief inability to work, i.e. taking care of a family emergency, may be considered acceptable reasons to grant you extra time.
While all credit card companies request and advise that you contact them in advance of a problem, some are more amenable to working with you than others. It certainly is logical to ask, politely, for a reprieve.
At the same time, you can often and easily avoid a problem by notifying the credit card company if you know you will be a few days late, at which point, you may avoid unnecessary fees. Or, if you can determine that a request to change your billing date from the beginning to the middle of the month, that pro-active call could help you budget to avoid recurring issues. Again, it is worthwhile to ask, and it is important to note that an unsuccessful experience with one credit card company does not indicate that others will respond similarly.
Explain the situation and circumstances, but also refrain from divulging too much financial information, which could be counter-productive, and even trigger enough alarm to cause them to cancel the card.
Among the options available when negotiating a settlement, consider asking about moving a payment date, reducing the interest rate or asking for a temporary payment waiver or reduction. If your situation is more serious and perhaps long-term, consider asking for a no payment, or forbearance agreement, or a longer-term re-payment plan with reduced or no additional interest, or even a single, reduced lump sum payment. Weigh these options in view of your own long-term needs or desire to retain that particular credit card. Understandably, there may be consequences with a request.
Realize that who you speak with as well as who might speak for you may make a difference in the outcome. Logically, more serious problems may be better settled with the credit card company’s manager or supervisor than with the first customer service representative with who you speak. Also, more serious problems may have a better outcome if you ask a more qualified person to speak on your behalf, such as a lawyer. At times, a non-profit credit card counselor can assist, but explore this with great caution by researching terms and reputation thoroughly before you retain such services.
Always get the negotiated agreement in writing and stay with the agreed upon terms of the payment plan. If your financial troubles continue or compound, re-connect immediately and do not wait until you default; companies may then not be willing to re-negotiate.
Working with a lawyer to re-negotiate may prove helpful at the outset as well as extremely beneficial if bankruptcy is inevitable. Understanding how a Chapter 13 or Chapter 7 bankruptcy works and should be managed is critical. Learn from an attorney how these provisions allow you to keep your property and discharge credit card and other debts while paying over a period of time. Contact a lawyer for help dealing with creditors and securing the best possible outcome.