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September 11th, 2009

Something Better Than Nothing: Credit Card Companies May Negotiate

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The Washington  Post reports that credit card companies are increasingly willing to negotiate directly with consumers who have unmanageable debt. Credit card customers experiencing long term lay offs or reduction in income may now be able to negotiate more favorable terms for settling their credit card debt. Against the background of falling consumer debt rates, this development seems to indicate that credit card companies are turning a corner with regard to hearing customers’ concerns. In July, consumers reduced their debt by about $21.6 billion, the highest rate since the Federal Reserve began keeping records. Consumer reluctance to rack up more credit card debt and insistent cries for debt help may be working.

Self Debt Help: Calling Your Credit Card Company

Credit card issuers are not publicizing eligibility criteria for modifying the terms of consumer credit cards, but it can’t hurt to ask. Here are some things to keep in mind when calling:

  • Have your account numbers and information handy: Have your most recent statement on hand when you call. That way you can verify your balance, the APR, and account number with customer service.
  • Be ready to speak honestly, and in detail: Credit card issuers are more likely to provide assistance when they realize that you are in deep financial trouble and cannot repay your debt. Supply dates of unemployment, the amount of monthly income lost, and other details pertinent to your situation.
  • Limit information to facts: “Just the facts, ma’am…” The famous line from an old TV show is great advice. Creditors don’t want to hear excuses, or your opinion of your former employer, or of their inustry. Provide specifics such as how much you can afford to pay each month, or the date you’ll be released by your doctor to return to work.
  • Be positive and professional: It’s embarrassing and frustrating to discuss financial problems with a stranger. Regardless of how angry, embarrassed, or frustrated you feel, don’t lapse into yelling, cursing, or making threats. You’re asking for debt help, and the credit card company can either say say “yes” or “no.”

If your creditors won’t work with you directly, don’t panic. You can get help with managing credit card debt.

Credit Counseling, Debt Consolidation, and Debt Settlement

If you are committed to eliminating your credit card debt, credit counseling can help you develop a cash based budget and negotiate an affordable debt repayment plan. Credit counseling services typically require you to make one lump sum payment per month; they deduct their fee and distribute the rest to your creditors according to your repayment agreement.

Debt consolidation is a way of rolling all of your debt into one payment. Options for doing this include borrowing a personal loan to pay off several credit card debts, or transferring multiple small credit card balances to one credit card. Credit counseling can also provide a form of debt consolidation as described above.

Debt settlement involves negotiating with creditors through a law firm or debt settlement company. This option may be your last option before filing bankruptcy, after credit issuers and credit counselors have told you they cannot help. If you’re several payments behind on multiple debts, a debt settlement service may be able to settle your debt for a fraction of what you owe. Your credit scores will suffer, but debt settlement is not as serious as filing bankruptcy.

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September 9th, 2009

Americans Slash Credit Card Debt

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Americans cut the amount they owe on credit cards and other consumer loans by $21.6 billion in July. That has some economists worried about how many people’s reluctance to spend will impact any economic recovery.

But despite concerns about when the economy will fully recover, you owe it to yourself to do whatever you can to dump credit card debt and other loans.

Read the rest of this entry »

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  • Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score. Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management. He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others. He can be contacted by visiting his personal site, GoodCreditLiving.com.

  • Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.

  • Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.

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