Credit Card Hardship: How to Ask For Help

/0 Comments/in /by

Americans hold at least $6,000 in credit card debt on average. And while credit card debt is considered “unsecured” debt, it can wreak havoc on your credit report if you miss a payment.

Whether you’ve lost a job or are just trying to make ends meet, there is a light at the end of the tunnel.

If you’re struggling to repay your credit cards, you could qualify for a credit card hardship program. Read on to learn more about this program and how it might be able to help you.

What is the Credit Card Hardship Program?

Depending on the issuer, your credit card company may offer a special program to help you during times of need. This program is designed to help temporarily reduce your monthly payment amount until you can get back on track.

In most cases, the program will last for a minimum of six months to a maximum of one year. During that time, you’ll still need to make your payments on time, but the required amount will be lower.

You may even be able to waive certain fees like late fees and over-charge limit fees depending on the company. The goal is simple: you get a break, and your card issuer still gets paid.

In order to enroll in this program, there are certain guidelines you’ll need to follow, but it’s a wonderful way to reduce your stress while salvaging your credit score.

Examples of Hardship

When it comes to financing and debt, there’s a myriad of reasons you could be falling behind. The most common reason is job loss. When you lose your income, of course, you’re going to lose the ability to pay certain bills.

Another example of hardship may include a serious illness or an injury. During those times, you may not be able to work, and you’re likely accruing some large medical bills, too.

A death in the family and even a divorce are also common forms of financial hardship. When you lose someone, you are not only struggling emotionally but likely financially.

Finally, another common cause of financial hardship is coping with a natural disaster. If you’re a victim of a storm, flood, or fire, you are probably struggling to maintain your financial obligations.

What to do Before You Enroll

A credit card hardship program can be helpful, but it may also impact your finances negatively in other ways. Before you decide to enroll, sit down and create a budget.

Take a close look at areas where you might be able to cut back such as your cable bill or your cell phone data plan. By shaving off a few dollars here and there, you might be able to make up for it and pay your card’s monthly minimum without a problem.

If you’ve become ill or injured, consider supplemental insurance that can pay you for time lost at work. Really think about the timeline of your financial hardship and how long you think it will last. This will help you when you call to enroll, as most issuers want to know how long to expect lower payments.

Click Here to learn more about credit repair.

When You Call

It’s important to note that most customer service reps may not be familiar with their company’s hardship program. When you call, simply ask if they offer one and if you could get some more information.

Some credit card companies will worry as soon as you mention your inability to make payments. Never tell them that you’re “unable to pay,” but instead just ask about the terms and guidelines of the plan.

It could take some time for you to decide whether the plan is worth it, so getting the fine print in your hands is the best way to start. After you’ve read all the documentation, you can submit a hardship letter.

Make sure you clearly and thoroughly explain your situation along with a timeline of how long you’ll need to be enrolled. Make sure you tell them exactly what amount you can reasonably pay each month. This number is key to ensuring you get a fair deal.

Understanding Terms

Once you’ve determined your desired payment and timeline, it’s time to submit your information to the credit card company. Keep in mind that not all issuers will accept your initial request.

Depending on the number, the credit card company may determine that your desired payment is too low. In this case, they’ll either submit a counteroffer with a new payment amount or decline your application.

Always emphasize your willingness and desire to repay your debt. Tell the credit card company you will stick to the timeline and once it’s over, you’ll be able to go back to your normal monthly minimum.

You should also find out if participating in this program will hurt your credit or not. Some companies may allow forgiveness and it won’t impact your score. On the other hand, they may require you to close the account altogether.

If you are forced to close your account, you’ll still need to make the payments or you run the risk of a “ding” on your credit report. If you have to close an account, it will hurt your credit, but it’s still better than being hit for nonpayment and collections.

There is Hope with Hardship Programs

Although it may not seem ideal, a credit card hardship plan can be extremely helpful in times of need. Do your homework and try to find ways you can cut your expenses to save money. As a last resort, these programs can help you maintain your good credit in the short-term.

For more information about writing a hardship letter, be sure to visit our website. 

Writing A Credit Card Hardship Program Letter

/0 Comments/in /by

When people use their credit card, they do not do so with the intention of coming to a situation in which they cannot repay their debt. However, some things may happen that affect their finances. While it may be temping to do nothing and simply hope that the situation will resolve itself, the reality is that it usually won’t. Furthermore, credit card companies understand that people sometimes have difficulties and they would rather work with you to come to a solution, instead of having to engage in expensive recovery actions. Hence, if you find yourself in a situation of financial hardship, you should be proactive and contact the credit card company to come to a resolution.

How to Write a Credit Card Hardship Program Letter

There are numerous templates available that show an outline of the things that should be included in this type of letter. What sets the credit card hardship letter apart, however, is that it has to be seen as a stepped approach, rather than a single letter that you can write and send. Rather, you must be realistic and expect to write a series of letters that include the right things at the right time.

As such, you very first letter should be one in which you explain that you are in financial hardship and why. You should be professional, considerate, and polite. The credit card company is not interested in how your hardship is making you feel, but rather in facts. They want to know what has happened to you financially and how this has impacted your ability to repay your debts. You should also offer to pay between 15% and 25% of the outstanding balance of your credit card.

Importance of Honesty

Honesty is very important in these letters. Do not, for instance, eagerly offer to pay 50% of your balance, unless you are actually capable of doing this. Also remember that time is one your side. Older debts are notoriously difficult to recover, so it becomes more likely for a credit card company to agree to a deal.

Whatever your offer is, it has to be one that you can actually afford. This is why you must also include photocopies of all your proofs of income and of outgoings. Send bank statements, pay stubs, unemployment information, copies of expenses, investments, and so on. The credit card company will require all of that documentation and it is likely that they will also contact you for more.

Make Sure to Comply with the Agreed Upon Payment Scheme

If, after receiving your letter, the credit card company agrees that you are in hardship, they may offer you some sort of program. If so, make sure that you agree to their terms and conditions, and stick to them in full. If you miss any of the payments then agreed, or if you otherwise breach the agreed terms and conditions, you will have rendered it null and void. Remember that the credit card company is doing you a favor by offering an agreement in the first place, so do make sure that you stick to it.

Writing A Credit Card Hardship Program Letter Examples

{Name}
{Address}
{Phone #}

{Date}

Dear {creditor}:

Please consider this letter my application for your hardship program.

I currently owe {amount} on account number {number}. My account is not yet delinquent.

Due to financial circumstances outside of my control, I am no longer able to make even the minimum monthly payment. {Explain hardship}. I am reaching out to you before my account is in arrears in the hopes of maintaining my good credit and avoiding late fees, a higher interest rate, and other penalties.

Please consider accepting monthly payments of {amount}. I would also appreciate it if my interest rate were lowered to {percentage}.

I am now {starting a new job/being treated for an illness/in a better living situation} and am confident that this rough patch will be over in a matter of a few months to a year.

I will be grateful if a revised payment plan is accepted. However, before moving forward with such a plan, please send a written copy of such and advise me as to how this might impact my credit rating in the future. I wish to avoid a negative credit report.

Sincerely,

{Sender Name}

Writing A Lower Payments Hardship Letter

/0 Comments/in , /by

There are numerous bills that you have to pay monthly or regularly. Generally speaking, these bills, such as credit card bills, rent, or utility bills, are paid at regular intervals. If you find yourself in a position of financial hardship, which means that you are unable to make some of those monthly payments, you may find that you have to write a lower payments hardship letter.

What Can the Letter Be Used For?

In most cases, a lower payments hardship letter is written for a line of credit where some sort of interest is paid. That is because all other types of bills, such as rent, utilities, or cellphones, are paid for a service. A reduction in monthly payments on those, therefore, would also result in a reduction of usage. However, on bills such as loans, car finance, mortgages, or credit cards, you could lower payments made on interest, but still make payments overall.

Write a Lower Payments Hardship Letter Formally

You must write this type of letter formally. It should be addressed to the right person in the right department, and that it should be formatted properly. It must include your personal details and your account details as well. You should also make sure that the letter is free from spelling and grammatical errors.

Describe Your Financial Hardship

Next, write a description of the financial hardship you are experiencing. The creditor is not interested in sob stories, however, so only put in the facts. Explain why you are in hardship and the impact this has had on your ability to pay your bills. Provide documented evidence (pay slips, termination notices, bills, etc…) of your financial situation.

Indicate Your Request Clearly

You should make your request as clear as possible. Indicate that you currently make quarterly/monthly/weekly payments on a certain account, and do tell the creditor that you have been unable to make payments for a certain period of time if that is the case. A word of warning: the longer you wait in writing this type of letter, the less likely it will be that your request for lower payments will be granted. Hence, write it as soon as possible.

When you make your proposal, do not simply ask your creditor for lower payments, as they do not know what you can and can’t afford. Rather, you should be concise and tell them exactly what you are proposing. Do not make promises you can’t keep, however. Creditors would rather wait longer for their money but know they are getting it, rather than expect a shorter period of time but payments are not actually made.

Honesty and openness go a long way. Remember that the creditors are interested only in how they will get back their money. If you have not made any payments for a long period of time, they are likely to have already started legal action against you. Hence, do not bury your head in the sand, but address the problem as soon as it starts to arise.

Lower Payments Hardship Letter Example

{Your Name}
{Your Address}
{Your Phone #}

{Date}

Dear {creditor}:

I am writing to request lower {weekly/monthly/quarterly} payments on {debt}.

Your records should indicate that I {have/have not} kept up with the required payments of {amount}. But now, due to {situation}, I can no longer afford that amount. {Describe financial/life conditions}.

I would like to propose lower {weekly/monthly/quarterly} payments of {amount}. I know this will extend the length of the loan that was offered to me, but the only alternative would be {default/bankruptcy/etc.}.

Please let me know if this arrangement works for you and I will immediately send the adjusted payment amount.

Appreciatively,

{Sender Name}

For more sample hardship letters, click here.

Writing A Hardship Letter To Credit Card Company

/0 Comments/in /by

Almost every adult in this country has credit card debt. Some only have a few hundred dollars of debt, while others have thousands of dollars of debt. Either way, there may come a time when it becomes extremely difficult to pay even the minimum amount that is due. The economy continues to be unstable and this means that it is possible that you may need some sort of debt relief, such as a lower monthly payment for a short period of time. This is something that credit card companies are very familiar with.

Why Credit Companies May Agree to Help

In most cases, credit card companies usually agree to work with people in difficulty because the alternative for the debtor is to request bankruptcy, which means the credit card company gets nothing. Hence, it is better to write a hardship letter, in which you tell the creditor about your financial situation. This will also stop them from harassing you, and it will give you a chance to protect your credit rating. It is not, however, a way to get out of your debt.

If you can prove hardship, the credit card company will usually help, for instance, by lowering interest rates and suspending any late payment fees. They will, however, also want you to stop using your credit card. Additionally, they want to see you make every effort you can to repay your debt. Hence, do make sure that you tell them how much you are willing to pay each month, and when you expect your hardship to be over.

Steps in Writing a Hardship Letter to Credit Card Company

  1. Make sure that you write your letter formally. Place the name of the company at the top of the page and date it as well. Place a reason line below this, and make sure your credit card account number is included as well.
  2. Write your first paragraph, in which you explain that you are asking for help and you tell them why you are in hardship. For instance, you may have been made redundant, or you may have had an unexpected huge medical bill. Be honest and open, but keep it short and to the point.
  3. Explain how you aim to rectify the situation. Tell them how much you are able to pay instead of your regular bills. Do not put more in that figure than you can afford. If you can only afford a dollar a week, then tell them and don’t say you can afford $10 a month even if you can’t. At the same time, don’t offer them less than you can afford either. They are likely to want to see a financial statement from you, so they will know if you can pay more than you are offering.
  4. Tell them when you expect your hardship to be over and what you aim to do about your outstanding debt at that point.
  5. Thank them for their consideration and ask them to contact you as soon as possible with their decision.

While there is no guarantee that your credit card company will agree to your request, most will accept it because it means that they will be able get what is owed eventually.

For more sample hardship letters, click here.

Hardship Letter To Credit Card Company Example

{Your Name}
{Your Address}
{Your Phone Number}

{Date}

RE: request for {consolidation/restructure} of loan for {VISA, Mastercard, etc.}, account {account number}

To Whom It May Concern:

I am writing to request the {consolidation/restructure} of my credit card repayment, due to financial hardship.

The current balance on my credit card is {amount in dollars}, and I have been paying {amount in dollars} every month for {length of time}. This had been an adequate system, until recently, when I fell on hard times.

Due to {death in the family, divorce, medical problems, etc.}, which began {date}, I have been unable to keep up with the payments. I have attached {list of financial documents attached}, which should illustrate exactly why I am in need of your help. I am accruing more and more in the way of late fees and finance charges, which means my balance just continues to increase, and there is nothing I can do about it.

I am requesting {consolidation or that the company accept a certain amount that is less than the total due}. I am extending the same offer to other creditors, so that I can avoid filing for bankruptcy.

Please contact me as soon as possible so that we can get the ball rolling on this situation.

Sincerely,

{Sender Name}