Bankruptcy Attorney | Managing High Credit Card Debt
Bankruptcy Attorney. If you are having trouble making payment on an unsecured credit card, recent changes in the law and the recession have dramatically improved your ability to negotiate favorable terms with credit card companies. Here are some options, depending on whether you want to keep or get rid of your card.
Is Credit Card Debt a Priority?
If you don’t have enough money to keep current on all your debts, credit card debt is usually not a top priority for repayment because most credit cards are unsecured. However, if you have a secured credit card, especially if it is secured by your home, you should treat it like other important secured debts.
If You Want to Keep Your Credit Card
If you want to keep your credit card, you may be able to get a great deal from your credit card company. According to an August 2009 post in the Consumer Reports Money Blog, credit card companies are lowering interest rates, reducing monthly payments, eliminating fees, referring customers to debt management programs, and even reducing balances owed. Call your credit card company and ask for an interest rate reduction (which will also lower your payments), elimination of fees you have been charged for late payments or over-the-limit charges, smaller monthly minimum payments (if you need that for a short time), or even a reduction in the balance you owe.
If You Want to Settle the Debt or Get Rid of the Card
You may be able to settle your credit card debt for a third to half of what you owe. Credit card companies will ordinarily not offer such a deal until you are several months late. Now however, some are reaching that point after three, rather than five or six, months. Usually, the company will require you to pay the settled upon amount in one payment or several payments. If you are already struggling with debt, it might be difficult to get a lump sum large enough to settle.
Alternatively, if you can’t pay anything on your credit card and have decided that keeping the card isn’t essential, one option is to stop making payments. Of course, there will be negative consequences. You may lose your credit privileges. You may be sued, but that will take some time. Your credit report will make you look like a riskier borrower, so other creditors will likely not offer you the best interest rates on new credit, if they offer you credit at all. And, of course, missed payments will bring down your credit score. However, the hit to your credit may be less severe than if you lose your home or car.
If you are unsuccessful in negotiating lower interest payments, a lower balance, or reductions in fees or interest on your own or feel that you could use some help, try contacting a nonprofit credit counseling agency such as Consumer Credit Counseling Services.
In addition, the CARD Act requires credit card statements to include a toll-free number where you can get contacts for three (if available) credit counseling agencies serving your area. Because contacts can only be provided for agencies approved by the U.S. Bankruptcy Trustee, you have some hope that the agencies will be legitimate. Even so, you should check out carefully any agencies you contact, as it often takes a while for a government office to find out that a company is engaging in fraudulent or abusive business practices. findlaw
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