Imagine a situation in which you've taken on more credit card debt than you can handle. Every month, you're lucky to be able to make the minimum payment. As a result, finance charges and late fees continue to pile up.
While there are many strategies for reducing your credit card balance, some of them may be out of the question because of your financial struggles.
This could lead you to contact your credit card company to negotiate your balance. Here are a few things to talk about:
- Workout agreement: You can ask your credit card company to remove late fees, lower your interest rate or reduce the monthly minimum payment. This is the most likely arrangement.
- Lump sum settlement: If you have a lump sum of money that you're willing to put toward your credit card debt, ask your provider if they'll accept it and write off the rest of the balance.
- Hardship plan: If you can prove that you're facing financial difficulties as the result of an illness or unemployment, your company may work with you to create a hardship plan. This typically results in a structured payment plan until you're able to regain your financial footing.
If you decide to negotiate with your credit card company, don't give up until you've tried everything.
In the event that all your offers are turned down, turn your attention to other strategies, such as a bankruptcy filing. For example, Chapter 7 bankruptcy allows you to discharge some or all of your credit card debt. This will give you the fresh start you've been seeking.