Today, almost all credit card issuers are working closely with customers to offer different types of debt settlement programs. The banks and lenders have determined that it is better to get some payments from customers rather than nothing or to see the customer file for bankruptcy. The banks are taking a variety of actions, including offering hardship programs that lower monthly payments, reduce interest rates, waive fees, offering to settle debt, or they may be referring customers to a debt management plan.
The number of people they are offering aid to is increasing. They are willing to now even help those who are just struggling to make their monthly payments on their accounts. So in other words, credit card companies and banks are not limiting assistance to only those customers that are considered “hardship” cases or who are already way behind on their bills.
Always remember that it is possible that a debt settlement program can reduce your credit score and ratings, so be sure to check in with the card issuer and ensure you understand how they will report your account to the credit rating agencies. Depending on the bank and how they report it, your credit score may be impacted differently depending on whether you agree to a settlement or to pay in full.
Another option to consider if it is offered to you is debt management plan. If the entire amount of your unpaid account is placed into a debt management program and you then proceed to pay off the balance over time, this does type of program won't negatively affect your credit. So consumers do have some different options to explore.
The bottom line is that if you do need to settle the debt for less than the full balance owed to a creditor, there will almost always be a negative impact on your credit scores. However the impact to your scores though is not as bad as if you were to default and not pay your bills at all.
Get details on what the major banks and card issuers are offering consumers to help them. The deals are not well publicized and almost always they are being offered on a case-by-case basis to customers. Individuals need to be pro-active in requesting help. You will need to call the customer service number on the back of your credit card to determine your eligibility. You may need to ask for a supervisor, or even negotiate your bills. If you are not comfortable in dealing with these credit card companies yourself, consider using a debt counselor on a contingent basis.
To find more information on the specifics for hardship programs offered by banks and lender, click here. Hardship programs do differ in some ways from settlements, and you can find real examples of how people saved and received debt relief.
American Express is fairly aggressively eliminating fees, including late fees, and other charges. In addition, they will work with customer to significantly lower their monthly payments. They accomplish this by offering a lower interest rate (which can be as low as 0%) and they will also agree to providing a lower monthly minimum payment. The American Express debt settlement and hardship programs are open to all card members to apply for, and not just delinquent ones. Cardholders will need to agree to a payment plan, and during the time they are on the plan they can’t use their card for purchases. However, when they successfully complete the plan they can resume using their Amex.
Bank of America is extending their repayment periods for select customers. They are now offering repayment periods that can last up to five years or longer. In addition, they are lowering interest rates, and the rate they offer could be in the low single digits. BOA does also settle credit card debts, and they will do this on a case-by-case basis for select consumers. They may end up deciding to settle your debt for less than the full balance that you owe them. More.
Capital One is offering an interest holiday to customers. People who are delinquent on their cards are being offered up to six months of zero interest rates on their accounts. This will in effect help them catch up on their payments. In addition, the hardship program may include debt settlements, fee waivers, payment plans, and APR reductions.
Chase debt settlement includes programs that will restructure balances to lower interest rates. Other fairly common steps include they will extend repayment terms using several payment programs, and they may also waive over-limit and late fees. When they offer interest rate reductions, they may be effective anywhere from nine to 60 months. While the exact new rate will vary based on several factors, it primarily depends on the customers personal financial situation and payment history. They may offer a rate as low as zero % to true hardship customers. Read more on Chase debt settlement.
Citi has hardship programs that will help settle debts, provide temporary forbearance, offer low interest debt consolidation loans, interest rate reductions, matching payments, and more. If a customer pays more than the minimum monthly amount due for 4 straight months, Citi is offering a credit equal to 20% of the amount paid beyond the minimum amount that was due. So pay on time, and also save more. Continue.
Discover Card has been offering debt assistance programs to some existing card members which will allow them to consolidate their debt into a fixed-rate, lower interest rate. This is accomplished using an installment loan that is issued through Discover Bank. In addition, if the customer has a severe financial hardship or unusual conditions, they are offering a hardship program that gives them a variety of single-digit interest rates. Details on debt settlement from Discover.
Settle medical debt - Hospitals, doctors, and health care providers also offers programs to settle debt. Learn more. While many of the terms and concepts are the same as credit card settlements, medical debt does have some unique characteristics.
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