Vision Credit Education, Inc.

Your Nonprofit Credit Counseling Organization

I am behind on credit card payments–Can I just start over?

March 21st, 2013 by Kenneth Long

So many of our new clients state that although they are behind on their credit card payments, their situation has improved to where they could afford their original minimum payments. They just might, if that were possible.

In fact, it just might be possible. There are a couple of methods for getting your credit card accounts (and credit history) back on solid ground. But, you must act before your accounts are charged off as bad debts and sold to debt collectors.

Hardship

First, you might be able to convince your credit card company to grant a hardship consideration request. This requires that you can demonstrate that you really were impacted by a bona fide financial disaster that caused you to fall behind. Overspending is not a valid reason. Instead, most card issuers will look for job loss, divorce or major medical emergency as a valid reason.

Second, even if you qualify you still must prove that the hardship situation has been corrected, and that you may reasonably be expected to afford your normal minimum payment. If you are still unemployed or otherwise still mired in hardship, then your request will likely not be granted. Understand also that this potential option is a temporary band-aid that will not dig you out of serious financial turmoil. There is also no legal requirement that your card issuer grant your hardship. If you were previously granted a hardship, then you may be declined this time.

Debt Management Program

While a hardship sometimes works for a single credit card account, it rarely is a valid option for a debtor struggling with multiple credit card accounts. Many hardship applicants fail to gain support from even half of their creditors.

Your creditors may require a more serious commitment by you to gain control of your finances, learn to stick to a budget and actually change how you use and repay credit accounts. Credit counseling is the method for teaching you these skills. Additionally, you may qualify for a debt management program, which is a formal hardship program that typically covers all or most of your mainstream credit card accounts as well as some unsecured personal loans.

A major component of a debt management program is the participation of major credit card issuers that agree to re-age your accounts. This brings your minimum payments back down to manageable levels, often less than what your were having to pay before you fell behind on payments. Most agencies allow for an automated consolidated payment option, which can make repayment much easier.

If you are struggling with late payments and think you could benefit from getting lower payments restored, then you should contact a reputable credit counseling organization to see if they can help. You can receive realistic expectations on how your payments and interest rates could drop.

Of course, if you are content to try to get back on track on your own, understand that the odds are really stacked against you once you are falling behind.  Fail to catch up and your accounts could go into default, making your credit problems bleed into legal problems!

This entry was posted on Thursday, March 21st, 2013 at 12:23 pm and is filed under Credit Cards, Credit Scores, Debt Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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