Hardship Payment Plans for Credit Card Debt

What are bank sponsored credit card hardship payment plans? Banks reach out through the phone and with mailers and offer a number of options to their credit card customers who miss payments. Most of the large credit card banks are willing to work directly with you shortly after you miss a payment. Hardship payment programs are a banks loss mitigation effort for credit card debts. The larger lenders have well established and effective strategies that are often fair and measured to your ability to pay. The problem is… they only offer them to you when you fall behind.

Short headline grubbing break:

There is no shortage of media coverage that touches on how difficult it is to modify an underwater mortgage; get mortgage payments reduced to a level consistent with a homeowner’s ability to pay; get approval on a short sale etc. Banks who originated, and/or service home loans people are struggling to pay are either insincere about, or ill equipped to provide, solutions to the housing implosion they helped to create.

How banks are dealing with those unable to pay credit cards is nearly the opposite.

How to get your bank to talk to you about a hardship payment for your credit card.

The first step is to talk to your creditors about your situation. Yes, the same credit card banks that may have jacked up your interest rates, or lowered your available credit limits – even when you paid them on time.

You may have already tried talking to your credit card banks about lowering your payment in the past. The hardship you explained to the customer service rep probably did not seem to matter.

That is primarily because the person you are speaking with is generally not empowered to make any changes to your payments, even if they wanted to, if your payments on the account are current. The same banks that are unwilling to work out lower and more affordable monthly payments with you when you were current are often willing to work with you if you have fallen behind.

If you are reading this section of the debt relief program after having missed credit card payments, you already know that banks start reaching out to you with phone calls, emails, and letters right away. Banks know that constant “reminders” that you are late with a payment increases their potential to get your credit card back on track with some type of payment. Many of the larger credit card issuers will reach out to you and offer lower monthly payments within days of missing a payment, while some banks won’t offer a lower payment option until you are weeks to a month or more late.

In the prior section of the our debt relief education, we covered how lower monthly credit card payments are available through consumer credit counseling services and companies offering debt management plans. More banks began making direct offers to account holders when payments were missed after the economy began dipping into recession. The payment reduction a bank may offer direct to you comes from their willingness to reduce your interest rate temporarily, or over the life of the repayment plan.

You do not need to send a hardship letter.

Drafting and sending a hardship letter to your credit card bank is totally unnecessary. Hardship letters are something more consistent with what you would include when you are looking at a home mortgage modification, a short sale, or qualifying for some type of benefit or adjustment on your home loan. Qualifying for a hardship program with credit card debt is literally just a matter of a phone call, and qualifying in your credit card banks system for the payment reduction.

How does a temporary credit card hardship repayment plan work? 

Hardship repayment plans will be different from one bank to the next. How late your payments are, how much you owe, your household expenses, all will contribute to what type of lower payment the bank will offer you in one of their internal hardship plans.

Bank sponsored lower monthly hardship repayment plans are accomplished by reducing your credit card interest rates.

Some hardship payment options have a temporary timeline. The temporary plans can last as little as 3 months and go as long as 12 months. Your payment is reduced because the creditor is willing to lower your interest rate for several months while on the the temporary hardship plan. Interest rates may be as low as zero percent on up to around nine percent. The creditors will often waive or eliminate any fees and penalties that were charged to your account when you are repaying through one of their hardship plans, but only after you make several payments on time.

Some, but not all banks, will allow the account to stay open when you are on a temporary hardship repayment plan. This would mean you could resume using the card when the temporary plan is over and you successfully made all of the payments.

The temporary plans are useful to someone who is only experiencing a hardship that is not expected to continue for any significant period of time.

How do long term hardship payment plans work?

Longer term hardship repayment plans offered by credit card lenders direct to their account holders did not become popularized until the economy started to take a dive a few years ago. Those banks offering long term plans, at the time of this writing, will close your account, freeze your interest rate at between zero and 9%, and amortize your monthly payment using your current balance. Your new lower monthly payment will be the same every month over a 60 month time period.

Some creditors offered long term plans during the worst of the recession, but now only offer temporary plans.

Long term hardship payments closely resemble how your debts are paid using a credit counseling service.

These “life of the balance” repayment programs closely resemble debt management plans available through a nonprofit counseling agency. One of the differences between using a credit counseling service, and setting up the hardship plans yourself, will be how many creditors you will have to contact in order to achieve the same result. And you may not be able to get the same results a counseling agency would get for you.

The credit counselor will only have to get your account details and your income and expense information from you once in order to start setting up your debt management plan.

If you have many creditors, and some of them do not offer the longer term hardship plans, you may be better off getting the lower monthly payments through a credit counseling service, rather than making all of the efforts on your own.

Your credit card bank will have some questions for you to answer before offering a hardship program.

Making calls to your creditors, or picking up one of the many calls they make to you, and then discussing lower payment options, will involve answering some qualifying questions. The information you will be asked for will focus on your monthly income and monthly household bills. Be ready to answer questions about what you pay for rent or a mortgage, how much you pay for phone and cable (cell phones too), utilities, groceries etc. How you answer these budget questions will impact what plan you qualify for, or if a reduced payment plan will be available at all. If your monthly cash flow shows money is too tight after you pay typical living expenses , you obviously cannot reasonably commit to any plan, no matter how good the terms.

Your bank, who want nothing more to collect on what you owe, may actually tell you that they don’t want your money!

If your income and expense exercise shows you have too much money after your regular bills are paid, the lower payment plan a credit card bank offers may not be as good, or may not be made available to you at all.

Some banks that offer the 5 year long term hardship repayment plans may require that you recommit to the plan every year. At the time of this writing, Bank of America is requiring this.

Benefits to hardship payment plans other than lowering your monthly credit card bill.

Depending on how many months you have missed payments your creditor may agree to “re-age” the account after 3 or more timely payments on the plan. This means they will bring your account current in their reporting to the credit bureaus. This takes the sting off of the 30, 60, 90 and longer late pays, that may already be on your credit report, and prevents them from affecting you in perpetuity. There are limitations to the re-aging benefit. Once your account is 3 months late, some banks don’t re-age.

If your account is not charged off (typically 6 months late), you can still get lower monthly payments from banks offering them.

As a general rule, whether you work through a credit counseling service, or work directly with your bank(s) to set up a hardship payment plan, it is best to do so before you reach 90 days of consecutive nonpayment.

Post your questions about hardship payment programs in the comments below for feedback.

Continue on with the Hardship Payment Plan section of the CRN debt relief program – 3 Warnings About Hardship Repayment Plans.


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  1. Cfar305 says

    Do these hardship programs, in your experience, cause the creditor to report anything negatively on your credit report. In other words, if you haven’t had delinquencies reported on an account, will getting into a hardship repayment program itself hurt your credit score?

    • Michael Bovee says

      Yes they can. Some creditors, but not all, will reflect that your account is enrolled in a managed plan similar to how they would report if your credit card balance was enrolled and be being paid through a nonprofit credit counseling agency. This is not considered a negative item on your credit report that drops your credit score significantly. It is just a scenario that future lenders will see (while you are on the plan), and that they may use in evaluating whether or not to extend you new credit.

      Hardship repayment plans for credit card debt are often not going to be available unless you miss a payment. Calling while current with your credit card payment usually results in no available payment reduction options. Once you are behind, and depending on the creditor, you can get late payment penalties removed and your credit report re-aged.

      Do you have just one credit card balance you are concerned about, or several? Who are the accounts with? What are your interest rates?

  2. Susan says

    What if you simply cannot make payments at all anymore due to disability and being widowed? What if a credit card company has a lien against your home and you can’t keep up with your payment agreement anymore? Can they force you to sell or will the lien just stay there? Is the credit card company more likely to offer a settlement or do they prefer to have the lien on your property?

    Thank You,
    Desperate Senior Citizen

    • Michael Bovee says

      Susan – I have never seen a credit card judgment result in the forced sale of a home. It is just not worth the expense, and credit card debts can be easily eliminated through bankruptcy.

      You have a hardship situation no doubt. One that may mean settling is not viable. Please post a follow up comment with:

      The state you live in.
      The balance on the debt today.
      The name of the creditor and debt collector involved.
      What you have been paying monthly.

      I can offer some more detailed feedback and options to consider in reply.

  3. Rob says

    My Mother-in-law is 83 years old, in a hospital in Knoxville, TN, and heading to a nursing home. She has about $5,000 in credit card debt, maybe $10 -20,000 in assets after sale of her house which has two mortgages in it. She’ll need all of this to pay nursing home expenses. She has $1,100/ month in social security income. The minimal payments have been made.
    How can my wife who now has power of attorney eliminate the credit card debt through some kind of hardship relief, if this is possible?
    Thank-you, Rob

    • Michael Bovee says

      Rob – Are you contemplating some type of reduced monthly payment on the credit cards, or a balance reduction through negotiating a settlement? Both are possible in this situation. I just want to be clear on the type of hardship debt relief you are targeting? Let me know in a comment reply. It would also be good to know who the specific lenders are and the approximate balance on each credit card.

  4. Jason says

    Hello my question is about debt consolidation. I have tried to getting loan to consolidate all my debt, but since my credit to income ratio is to high I get declined. I know if I were able to consolidate my cards i would be paying $300-500 less than what I am paying on them seperately. It seems to me that the banks do not take this into account. What are my options? I really dont want to declare bankruptcy or use the reduced debit plan if I dont have to.

    Losing my mind

    • Michael Bovee says

      Is your current credit score 680 or higher?
      Are you trying to consolidate credit card balances totaling less than 30k?

      Let me know in reply and I may be able to point to some alternatives. There are also some creative ways I have helped people work through something like this using one or two banks hardship payment programs, but not the others.

        • Michael Bovee says

          Peer to peer lenders like Lending Club look for a 680 score, but do lend up 30k. Your credit score will hold you back from getting approved from them or the other national player – Prosper.

          Which banks are your largest 3 balances with?
          What are the interest rates on those cards?

          Also, if balances total 25k, could you afford the credit card payments if they were consolidated to a single payment of roughly 525.00?

          • Jason says

            If I were able to consolidate them with payments of $525 that would be great. Discover, USAA are my two biggest and I am not sure what the rate is for them off the top of my head. I mean I am trying to get a smaller amount to pay off the smaller ones and am unable to do it.

            • Michael Bovee says

              With your credit score, and a debt to income ratio that lenders would view as too high, working with a nonprofit consumer credit counseling agency may be the best way to consolidate your credit card debts into one lower monthly payment.

              Credit counseling services have preset arrangements with your lenders where your payments will be reduced to between 1.7% and 2.5% of your combined credit card balances. With a 25k total your payment would look something like:

              25k at 1.7% = 425.00 consolidated monthly payment.
              25k at 2.5% = 625.00 consolidated monthly payment.

              My comment above estimated the middle of that range at 2.1% of your combined credit card debts being your consolidated payment of 525.00.

              You can learn more about the benefits and drawbacks of using a credit counseling agency to consolidate debt in the article series here.

              Depending on your monthly cash flow, you may also be able to use some of the ideas I outline in how to consolidate debt creatively.

              Post any questions or concerns you have in the comments of those additional resources and lets go from there.

  5. Bob says

    Michael – if you make your payments in a low-interest hardship program consistently and then hit a point where you can’t pay, will the previous interest rates be reapplied to your balance? Second questions: Is it possible to settle with a cash pay-out after you’ve agreed to a hardship plan if things get worse for you?

    • Michael Bovee says

      Bob – Anytime you cannot pay on time you risk the interest rates going up. Being in a hardship program is no different. You should expect that to happen, unfortunately.

      You absolutely can settle for a lump sum lower pay off if you fall off of a hardship program. Either direct with the original creditor (often within several months of your payments stopping), or later with a collection agency or debt buyer.

  6. Marc says

    I have been on workout plans for three credit card accounts for over 30 months and have not missed a payment. The credit reporting agencies show the accounts as either “closed” or “charged off.” This is reported every month that I have made a payment. I have been making payments as agreed and my credit remains damaged.

    Is this ongoing reporting of negative information permitted by the Fair Credit Reporting Act? If yes or no, please cite the the specific section.

    • Michael Bovee says

      Marc – I need to understand much more clearly what is happening.

      When you enrolled in the hardship plans directly with your credit card lender were you already late with payments? If so, how many months? When you enrolled in the payment plans, were you doing that with the bank or a debt collector?

      Which credit cards are you enrolled in these payment plans with?

      Is your credit report showing that your balance is being reduced each month?

      I can offer more feedback with answers to those questions.

  7. marc says

    Thanks for your quick reply – impressed.

    Answers to your questions follow:

    I have workout agreements with three credit card companies and the bureaus are
    showing an accurate reduction in balance. Specifics about each account follow;

    1. Bank of America – I was greater than 180 days late when I entered the agreement.
    BOA reports my account as “closed” to the bureaus and accurately reports my balance.
    I receive a letter on BOA letterhead each month. It thanks me for my payment and
    accurately show my remaining balance.

    2. JP Morgan Chase – I was 150 days late when I entered the agreement.

    Chase reports my account to the bureaus as “closed” and accurately reports the
    balance. I receive a statement each month that reflects same.

    3. Discover – I was 60 days late when I entered the agreement. Discover reports my
    account to the bureaus as “closed” and accurately reports the balance. I receive a
    statement each month that accurately reflects same.

    I appreciate your help.

    • Michael Bovee says

      Thanks for the additional details Marc. When you are offered a credit card hardship plan your accounts will sometimes be reaged to show you are current with payments on a forward looking basis (as long as you do not miss any of your new lower payment). Sometimes the bank will not reage until you have made several of your new payments on time. Sometimes they will not reage at all. They are not required to reage.

      Without seeing your credit reports I cannot say whether Chase, Bank of America, or Discover is showing you behind with payments all this time. But if one or more is, it would hurt you because the account was not brought current.

      The Bank of America account went 180 days before your new payments started, so it likely shows charged off and would not be able to be reaged and brought current. Chase and Discover may not have charged off, but would still show 2 months, and 5 months, of missed payments from back then. But these two could be brought current if they are not already.

      Do you have other missed payments with any creditors in the last 24 months? If not, do you know your FICO credit score?

      • marc says

        Currently I have no other missed payments. The only other account that I have open is my home loan. I was 12 months delinquent when the lender agreed to permanently modify it in April 2012. I haven’t missed a payment since then.

        I don’t know my FICO score. Trans Union says my Vantage score is 637 as of this morning.

        • Michael Bovee says

          Thanks. Those late/missed payments prior to the loan modification are likely having the largest impact on your credit right now.

          Go ahead and call Discover and Chase and find out if they are showing your payments and your account as current in their database.

  8. Mike says

    I have 2 credit cards and 1 line of credit.
    I have a low wage job with insufficient income.
    I have not missed a payment for the last 5 years.
    I’m borrowing from one source of credit to pay the other and I’m not paying my debts down.

    I owe Bank of America almost $20,000. Property tax, due twice a year, taps me out. I really need a hardship repayment plan for Bank of America credit card.

    Which one should I ask for? 0% interest? Lower minimum payment? Which program works best? Which program is attainable?

    I don’t qualify for chapter 7. I would have to do a chapter 13 bankruptcy. Suggestions please?

    • Michael Bovee says

      Mike – It is not so much which hardship payment program you ask Bank of America for, but which one they will offer you. And more often than not, you have to have missed a billing cycle in order to get them to discuss reducing the monthly payments. The lower minimum payments on these hardship plans are a direct result of interest rate reduction. The rate you qualify for is something that will come from your conversation with BofA. Be prepared to answer a litany of monthly income and expense questions. You can also call a consumer credit counseling company and have a free budget session over the phone and get a monthly payment reduction quote out of them. The CCCS company quote will be similar to what Bank of America would offer. Call 888-317-8770 to talk to a credit counselor.

      If your monthly payment cannot be reduced to an amount that is within budget, and because chapter 7 is off the table, I would suggest you look at settling debts as an alternative to chapter 13.

  9. Frustrated Student says


    I am in way over my head on 3 credit cards and have a boat load of student loans. I used my credit cards to pay for my expenses associated with survival and supplies from my undergrad and graduate education and now I am just plain BROKE! I recently got granted a principal and interest deferment on 1 set of student loans but could only get an interest only on the other which I still cannot afford ($189/mo). I am only 30 and while I admit to making some bad purchase decisions when I was younger now I can’t get out of the whole of credit card debt. What is even more frustrating is that I have never paid late due to using 1 to pay another or borrowing money from family, but my credit score is still only 613 with no late payments ever. I feel like I might as well never have paid the credit cards if my score is still rock bottom low. I need to know how to approach my credit card companies as I am now over each limit and really can’t pay considering I can no longer finagle using 1 to pay the other and am a firm believer in making my own bed and lying in it. My family is fed up with helping and I can’t say I disagree.

    1 – Chase $6,600 – min pymt $140
    2- Capital One $5,000 – min pymt $150
    3 – My local credit union $15,000 – min pymt $300

    I am employed FT but do not make nearly enough to support my household expenses (contrary to popular belief of student loan authorities) and pay these high monthly payments. I really hate any derogatory remarks on my credit report, but what is the purpose of caring at this point when I’ve busted my butt to pay on time and now have a 613 (I used to have a 700+ before student loans). I have a friend with multiple collection accounts and she has a 589 score…my squeaky clean payments haven’t earned me much better. What do you suggest? What can I do to bring my credit score back up and how can I lower my payments.

    • Michael Bovee says

      Frustrated – What are the interest rates on your credit cards? Could you afford the payments on them if your consolidated monthly payment on them were say $550.00? If so,creditor styled hardship plans could work. With the Capital One account and not know what credit union you have, you may want to work with a nonprofit consumer credit counseling agency to achieve that same credit card payment consolidation (maybe lower).

      If your credit card debts were out of the way, would you be able to then afford the payments on the student loans? Are your student loans private or federally backed? Have you consolidated?

      • Frustrated Student says

        Thank you for the reply! I am at my wit’s end with cc debt at this point. I want to go back to the way my grandmother did it…cash only!

        My rates are as follows:

        Capital One rate = 22.90%
        Chase rate = 13.24%
        Credit union = 7.5%

        I want to do whatever will harm my credit the least but still allow me to lower my monthly payments. At this point it is probably only a matter of time before they take my credit limits away anyway considering the consistent over the limit activity. If I pursue hardship or credit counseling, do those statuses come off of the report once you have exited the program or is it like bankruptcy and stays reflected even though it’s satisfied/over? Do these hardship programs/counseling notations on your credit report really look better than bankruptcy?

        1/2 of my student loans are Federal and the other 1/2 are through the HESAA which I believe is a private state agency. I definitely want to explore consolidation but want to allow my deferment to run out first (why consolidate and have to pay if they are deferred for a while ya know). The payments will be an excess of $1400/mo once the deferments expire which is still unaffordable. But with the hopes of consolidation (do you know any companies for this?) and alleviating cc debt I can definitely send something.

        I just want these cc balances gone! I am trying to do the responsible thing and continue to pay but at this point I’m ready to give up.

        • Michael Bovee says

          If you enroll in a debt management plan with CCCS, some or all of the creditors will add a notation about that to the credit reports. This does not really impact the score in any meaningful way. When you finish the repayment plan, or take over payments down the road, the fact that you were working with a credit counseling company is fairly irrelevant. CCCS has an advantage over the DIY hardship plan approach.

          Working on your own – in order for you to get your creditors to agree to reduce your interest rates through their internal hardship programs, you often have to prove a hardship. That is not easy to accomplish when you are current with payments, but becomes all to evident when you miss payments. You sometimes have to miss more than one payment before a creditor offers a reduced monthly payment. This means 30 day, 60 day late showing up on your credit reports. And this will impact your credit reports and credit score.

          Comparing credit counseling with bankruptcy on your credit report is a bit nuanced. The DMP on your credit report does not dramatically hit your credit score and can be viewed as temporary. Bankruptcy on your credit report is a killer, and stays for 7 years (chapter 13), or 10 years (chapter 7), and will have a dramatic affect on your score. But that’s a long term view. Short term – lenders will often see the fact that you are on a managed payment plan through credit counseling and view that similar to how underwriting looks at a chapter 13. So your score does not really help in this scenario. Many people will qualify for new credit products sooner by filing chapter 7, than by signing up for credit counseling or using a DIY hardship payment plan approach.

          Here is a more thorough outline of credit ratings/reporting when comparing debt relief options: http://consumerrecoverynetwork.com/credit-report-score-rating-debt-relief-programs/

          You can call and speak with a credit counselor and get an exact quote of what you monthly payment would be reduced to by consolidating in a DMP: 888-317-8770.

          When it comes time to look at any and all student loan options you can qualify for, check out http://www.studentloanborrowerassistance.org/. You can consolidate your loans without hiring anyone. You can also look at the availability of income based repayment plans when ready to tackle this.

  10. Chris says

    My situation is similar to that in Jason’s post on August 7th. I want to consolidate my credit card debts and I cannot get a loan to consolidate them from traditional banks. I have researched DMP and Debt Settlements, but am not entirely certain what is right for me. I have not missed payments, but had to use one of those promotional checks companies often offer for either 0% or very low rates for a certain period of time and it was for $450. I am the only person working in my household and we live paycheck to paycheck, my girlfriend is in school full time. We have had a hard time paying bills, but have only had a couple of late payments of a few days. My credit score is between 730-740 and my debts on cards total roughly $25,000 and the companies I have them with are Discover, Bank of America and Chase. Do you think Lending Club might be the way to go? Or some other alternative? I have contacted 2 companies I have cards with and asked about hardship programs or lowering my rates. I haven’t heard back just yet as I emailed them this morning.

    • Michael Bovee says

      Chris – A few years back, at the peak of the recession, you could contact your credit card lender while still current and discuss eligibility for their internal hardship repayment plans, and succeed with getting a reduced monthly payment (from their lowering your interest rate). We now appear back to a point where most people do not get approved for hardship plans and payment reductions without having missed a payment first. Let me know what happens with your requests.

      I can offer more meaningful feedback about consolidating with a place like Lending Club or Prosper, working with a nonprofit credit counseling agency, or settlement, if you can answer the following in a comment reply:

      What are your interest rates currently?
      Do you consider your income stable?
      When does your girlfriend finish school?
      Are there student loans that will enter your budget picture? If so, how soon?
      Do you have credit product goals in the next 2 to 3 years (home loan, auto)?

  11. Overwhelmed says

    I am looking for the best solution to my debt problems. Until this past year our credit score was well into the 700s and there were no issues. Then one thing after another came our way causing us to over use our credit cards. First, a tornado ripped through our tiny town, doing damage to our home and vehicles. The insurance claims were not enough to cover the needed repairs. Then my father n law suffered a stroke that left him disabled. He was the only one in the household working and still had two minor children at home. Four months later my daddy passed away unexpectedly without any life insurance. We were trying to help run three households on two incomes and there was no way to male ends meet other than use the plastic. That has left us with four credit cards (none with more than a couple hundred dollars remaining credit), medical bills and a loan for home repairs (not to mention student loans). Credit cards alone are around $38,000; all interest rates of 12.99% or 13.99% with the exception of one being 6.5%. We can only afford the minimum payments and those are even getting hard to do. My current credit score is 643. I have tried to get personal loans to consolidate debt but been denied because of too much debt. I have contacted my credit card companies to ask for a reduction in interest rate or hardship program but have been told nothing like that is available to me. I refuse to file bankruptcy and I don’t want to damage my credit score any further but I don’t know what else to do. My husband and I both have jobs. We are willing to repay the debts but just need help tomake the repayment more manageable. Please help!

    • Michael Bovee says

      Overwhelmed – It is not uncommon for credit card lenders to deny access to some of their lower monthly and hardship payment programs when your payments are still being made on time. And it is becoming increasingly difficult to coordinate lower credit card payments across multiple credit cards. While the banks may be saying no to you, they work efficiently with the proposals that they receive from nonprofit consumer credit counseling agencies.

      How would your budget look if you were able to get your credit card payments down to, say 750 to 800 a month? If that seems doable call 888-317-8770 to reach a credit counselor and go through a free DMP consultation to get a down to the penny idea of what your payments can be reduced to. Be sure to talk to them about the hardships created by the tornado in the event there are some better reductions available.

      If you learn something that would prevent you from enrolling in a managed repayment plan, come back and post an update and lets go from there.

      • Overwhelmed says

        My only concern with debt management plans are that you cannot have any credit cards during that time. My husband has to have a credit card, he has to stay away from time to time with work and has to have a credit card for reservations and such.

        • Michael Bovee says

          Keeping a card out of the DMP is common for the self employed and for work purposes. Be sure to highlight the job angle of having a card kept out of the program when speaking with the credit counselor, and take care to select the appropriate one.

          Debit cards can function the same way too.

    • Michael Bovee says

      Sure, but just know it is only a rough estimate based on national averages. You need to call a credit counselor and go through a complete session in order to get an exact quote.

      I estimate your monthly payment would be 546.00.

      Here is how I came up with that:

      Credit counseling agencies are able to get your credit card payments reduced based on interest rate concessions they have, for the most part, preset with most banks. The interest rate reductions for each credit card will vary based on the bank, and stuff that is unique to you. All of that rolls into the national average payment for people in a managed plan with a credit counseling agency of 2.1% of the total balances enrolled in the plan. This is the middle. People can pay 1.7% of enrolled balances, and on up to 2.5%.

      While I shot the middle on yours at 2.1%, I encouraged you to bring up the tornado because there are instances where some (not all) creditors offer better concessions to those hit by a natural disaster.

      I cover credit counseling in a three part debt relief series starting on this page: http://consumerrecoverynetwork.com/credit-counseling-services-help-lower-credit-card-payments/. The last installment covers cautions about credit counseling.

  12. Barbara says

    There is a credit card debt of over $18,000 in my name, it is debt that occurred while married. This debt is mostly transferred debt to obtain lower rates than my then husband had on his debt, the rest was raising the children while support payments were not there: the debt was recognized as my husbands, agreed upon by both and written in the divorce decree.
    I am disabled and receive approximately 10,000 a year to support myself and children(one of whom is disabled). My former husband became disabled this past year; he has stopped paying all debts in his name. This one remains in my name (except on the divorce decree); I can no longer pay this debt and have no chance of being able to do so in the future.

    I have little assets left. I do own my home outright and dearly want to protect it.
    I live in Michigan and the debt is to Bank of America.
    How do I best address this situation?

    Thank you in advance for your consideration.

    • Michael Bovee says

      Barbara – Likely the best lower monthly payment you would see in a BofA hardship plan would be 300-ish a month. If that is just not affordable, it is what it is, the account will go unpaid. You will want to work toward saving up about roughly 40% of your balance in order to settle the debt at some point in the next year if possible; within 24 months would be good; and within 36 months if you just simply have to take that long to save up. If you end up getting sued for collection, the amount you will need to settle the debt will be higher than catching this earlier. Also know that settlements can be lower than 40%, but being realistic means you are better prepared.

      If you want to protect the home you own free and clear, you likely have to rule out bankruptcy in Michigan. If you want to protect the home from a lien resulting from a judgment if sued for collection, settle this debt early to remove the risk of being sued.

      • Barbara says

        Is there no hope of the debt being excused when there is no way to pay it and those circumstances will not change? Is this something not done by B of A?

        And why is it that in Michigan bankruptcy would not protect the home? (I couldn’t even afford to file for bankruptcy at this point.)
        Would it make a help if I transferred ownership/title of the home? (Joint or totally)
        The neighborhood is changing quickly as the economy continues to dive here and the equity in the home is our only hope of moving on.

        • Michael Bovee says

          Barbara – It is the equity in the home owned outright that I was responding to regarding chapter 7 bankruptcy concerns. You should talk about this with a bankruptcy professional in your state, but Michigan has a lower home exemption when filing chapter 7 in order to discharge the BofA debt.

          I would not venture to guess what you would need/want to do about assets you hold that are at risk from creditors. That is something else to talk over with an attorney, and not the kind of detail to discuss online.

          As far as BofA excusing, or otherwise forgiving your debt in it’s entirety, no, that is not typically done. Not in today’s debt collection environment, and certainly not at this early stage of delinquency. And besides, most any creditor or debt collector is not going to view your situation as no asset and fixed income (where some great outcomes for consumers are available), when you own the home unencumbered.

  13. Barbara says

    A main question that prompted my search for answers today is how best to address this situation with B of A.
    It seems that most folks insist that you must default in payments prior to discussion but that seems like it only makes a bad situation worse (i.e. late fees, bad faith, etc). It also creates in environment of extreme stress in an already over stressed situation.
    Is there no way to address the situation with honor.

    • Michael Bovee says

      Barbara – It is, unfortunately, next to impossible to reduce the balance of a debt to an affordable level at this stage. It sounds to me like the only way for you to be able to afford the credit card debt with BofA would be for them to reduce the balance, then amortize that new lower balance out over xx number of monthly payments. They are not doing that. There were some signs that something like that was being tested (60/60 plans – 40% balance reduction with 60 months to pay), but that was at the height of the recession a couple years back. I do not think BofA is doing that anymore, and when they were, I am pretty sure it was mostly through a few third party non profit credit counseling agencies.

      BofA can settle directly with you, but it is not generally going to happen for the first several months. I cover that in much more depth in the debt settlement section of the site. You can start here to learn more: http://consumerrecoverynetwork.com/how-call-bank-negotiate-credit-card-yourself/.

      I hear you on pegging the stress meter! But that stress can be reduced by knowing what can happen, and when, before it does. I try to pull the curtain back on any/all outcomes on this site.

  14. Nia says

    Hi & Hello!

    I have more than nearly 20 credit cards and have a load of student loans. I used my credit cards 5 different to pay for my expenses associated with purchases and supplies from my undergrads and I am just almost broke every time I paid bills. I recently repayment education loan ($150/240mo). I am only 27 and while I admit to making some bad purchase decisions when I was younger now and even I can’t get out of the whole of credit card debt. What is even more frustrating. My current credit score is still only 624 with no late any payment due.

    What do would you like to suggest? What can I do to bring my credit score back up and how can I lower my payments?

    • Michael Bovee says

      Nia – With that many accounts,and being stretched thin, call and speak with a counselor about what your monthly payments can be reduced to: 888-317-8770

      Let me know how that goes, and if you are still not able to see a light at the end of the tunnel, lets go from there.

  15. Eric V says

    When an account is written off what are the possibilities for preventing movement to a collections agency?

    • Michael Bovee says

      It depends on the lender. Using credit cards as an example, most charged off accounts will get dumped into the collection pipeline.

      What type of debt is it, and with who?

  16. Dave says

    When banks agree to re-age, after making several payments or completion, what does that exactly mean? Does it mean they will delete the negatives from the start of the program?

    • Michael Bovee says

      I t basically means you are not late in perpetuity. It does not mean the late pays you may have showing on your credit reports will be removed. But you will not show late, even though you typically do not catch up all payment to current when you go with a hardship repayment plan. But they do agree to bring you current without you having to make all of those missed payments. Credit reporting wise, it is better than being considered late until you pay all of the arrears, and affordability benefits are a benefit immediately.

      Credit card banks that do not offer you to reage accounts will often reage if you are working with a credit counseling agency.

  17. marge says

    Hello, I am presently 32,000 in credit card debt with 6 cards (cap. 1, chase, discover, US bank, HSBC, citibank). The interests are all between 19 & 21%. My Income drops from $900 p/wk to about $300 p/wk during July and I have no income during August and the first half of September(I’m a part-time teacher). I have paid my monthly bills on all the cards up until now. My question is, will a credit card company allow me to defer payments for three months until I am bringing in money again? thank you

    • Michael Bovee says

      marge – No. Credit card companies do not want to give you a monthly deferment. They will often accept a lower monthly payment plan, and reage the credit cards, when you work with a credit counseling agency. And they do offer these payment plans when you are a few months late.

      If you cannot pay through the summer, but are able to pay an estimated 670.00 a month starting in September, try working with a credit counseling agency. You can call one now and look into any programs they may have for your situation, or when you are able to budget the consolidated amount with a reduced interest rate.

      Here is more details on consolidating debt and reducing your monthly payments through a credit counseling agency: http://consumerrecoverynetwork.com/credit-counseling-services-help-lower-credit-card-payments/

      Is 670-ish a month out of the question right now?

  18. Alan says

    I am continuing my saga from http://consumerrecoverynetwork.com/question/is-this-chase-hardship-plan-the-right-way-to-go-or-should-i-hold-out-to-settle-this-account-rb/#comment-128961

    So, today I got 60 months 0% with Chase on $40k and all excited called BofA to try to get the same terms on $35k that I have with them, but BofA denied me. We went through 14-16 questions about my financials and then few minutes of computer thinking and I was denied and referred to some debt counseling agency. When I asked was I denied because I did not have income (debt-to-income ratio to high), or because my income was too high (debt-to-income ratio to low), he said (if I understood him correctly and if he understood what I was asking him) that it is because I don’t have enough income. My impression was opposite – that I didn’t qualify because I have “too much” income and since I am current on my minimum payment, they don’t really care to offer anything better.

    Few interesting things:
    – one of the questions was “Do you currently have enough money to pay for food?” I said that that was a tricky question, and he said if I say “no” the computer wont let us progress to a next question, so I said “yes” and we moved forward. No I am thinking – if I said “no”, I don’t have enough money to pay for food (as I am so squeezed right now that can only afford mac without cheese) would that made me eligible for hardship, or would just terminate this qualifying “test”? What do you think?
    – when we talked about my expenses, he only included my mortgage payment and all cc combined minimum payments; he asked me do I have a car loan or any other recurring payment, which I don’t. He didn’t asked me how much I spend on utilities, food, gas, car insurance, or anything else. Is it possible that he misunderstood the question and by not including these expenses I (my debt-to-income ratio) basically appeared that I am not in the hardship and thus do not qualify for the program? What do you think?

    Thank you Michael!

    • Michael Bovee says

      1 for 2 for now. Based on what you shared, BofA said you did not qualify for the hardship plan because your income could not support the minimum payment they calculated.

      Couple of approaches you can take:

      Call back and go through the exercise with updated numbers, the excuse being you were caught unprepared with the questions, and replied with ball park numbers. You now have accurate ones. See what happens. And be sure to really narrow this down, leaving off comments about mac w/o the cheese, or other embellishments (while colorful, and I would appreciate them if I were the customer service rep, some people miss out on how life is indeed a tragicomedy).

      If that does not work, take the experiences and nuances and post them in a comment update here, and lets go from there. You will have a couple of additional opportunities.

  19. Alan says

    …DID IT AGAIN! 2.75% on $20k and 2.25% on $15k. Not as good as 0% with Chase, but a huge help from current payments/rate.

    So, I followed your advise Michael – called BofA/FIA Card Services, talked to a super nice lady from South and we updated the numbers and computer said that now I am approved (better debt-to-income ratio – more income left). It looks like I did “too good” with my updated numbers that I couldn’t qualify for the 0%. The magic number/debt-to-income ratio was 61%; my expenses (but ONLY my mortgage + my minimum cc payments, excluding BofA) were 61% of my monthly income. Now, after I add my new monthly BofA payments, my debt-to-income ratio goes to 68%, with 32% left for all other living expenses (food, utilities, insurance, …..).

    Thanks Michael and thanks BofA!

    • Michael Bovee says

      Sweet! 2 for 2 it is then.

      Thank you Alan, for sharing your experiences enrolling in the BofA hardship payment plan here, and the Chase hardship on the other page. Other readers are going to learn from your experiences, which is what this site is all about.

  20. laura says

    i lost my job for 2 months so i’m barely able to make payments on my credit card. i have Chase. i still managed to pay the minimum ($400) a month since my balance is $20K. would the Hardship program affect my credit score a lot? my score is about a 745. thank you

    • Michael Bovee says

      Enrolling in a credit card hardship repayment plan directly with your bank, and when you have not missed payments, or are not yet considered 30 days late, should have either no impact on your credit score, or only hit you a few points due to the account getting closed (if a 60 month hardship repayment accounts typically get closed, where the temporary lower payment plans may not close your account).

  21. Lori says

    I have PoA over my father’s finances. He is 76 years old, and has about $24,000 in credit card debt that is now seven months past due. I did not know the debt was occurring until I also realized he has dementia. My issue: I need to move him closer to me, and he will need some sort of credit of his own to rent/buy in my area as I just “used” my credit to buy a home myself. My Qs are:

    Is it worth it to try debt settlement in this case? And if so, since I would be using my own money to pay, are there any special circumstances/laws to which I can refer where I can pay 10-20%?

    What advantage(s)/disadvantage(s) is/are there of a 76 year old man having/not having good credit? He just has SSI and a minimal pension payment each month coming in with his mortgage and utilities/living expenses to take care of. It is the ability to have him live somewhere closer that concerns me most…

    Thank you!

  22. Lori says

    I should have noted in my previous post that my father has only lived in his current home for three years and put down a very minimal down payment through a VA program. He has regularly paid his mortgage. The area in which he currently lives is also significantly less expensive than where I am wanting him to move, thus he would need a larger loan if he buys.

    • Michael Bovee says

      He will not get a home loan approved with those 7 months of late pays on his credit reports now.

      There are no provisions or laws, or set policies with creditors and debt collectors, where you would be able to settle for 10% to 20% of the balances owed because you are settling on his behalf, or using your money to do it.

      There will still be a utility function to your dad having credit. It will take a while for his to bounce back after the accounts are settled. If his dementia is very early stages now, what will it be when his credit is in good enough shape to buy a home again? And at that point you will need to assess if he should be on his own.

      Assume for a moment that you will need 9kto settle the 24k of credit card debts he has. How soon until you pull that amount of money together?

  23. Shelley says

    I have around $44 K in credit card debt…won’t go into details, but obviously foolish financial decisions, Paying minimum payments over $1,300 per month. My credit score is 743 (my husband and I just completed a home refinance). I am eligible for a consolidation loan, portion home equity and portion installment loan based upon existing home equity. However, the combination of these will not satisfy the full amount owed to the credit card companies.
    I am curious if I should talk with the credit card companies to see if they will reduce balances, so I can pay these in-full? Or…should I leave my home alone and discuss some other option with the card companies? I checked with credit counseling agency…wasn’t going to diminish payment a significant amount, also spoke with an attorney friend regarding Chapter 13…not for me either…I work full-time, not a tremendous salary, but I have worked there nearly 20 years, government related and secure.
    Only late payments have amounted to 2 or 3 days due to mail issues…
    I will have to begin paying student loans for grad school ($48,000) in December…in forbearance at this time.
    Just curious about options before I sign on an installment loan…
    Thank you for the opportunity to ask these questions…

    • Michael Bovee says

      Replacing the payment to the credit card banks with a payment now secured by your home, and for basically the same amounts, is typically not a great strategy. Not only is there little to no monthly payment relief, if something does happen with your income, and your unable to make payments, your home is at risk. Were these debts not consolidated and secured by tapping into your home equity, you have more flexibilities.

      Settling the credit card bills may be a better option than debt consolidation. I can help you weigh this alternative best if you post the name of the credit card companies, along with the rounded balance owed on each.

  24. Inza says

    My 86 year old husband has dementia and had to go to an out of state nursing home that can handle violent behavior. In our 50 years together we have never not paid our bills. I am 71 and now after having to pay a nearly $4000 per month patient amount (after Medicaid) I am left with 60k in credit card debt that a bankruptcy lawyer told me to simply ignore. I do not qualify for relief in that form because we own a piece of commercial property (our main source of income) that is under lease as a meineke muffler shop right now. That lease and income ($4000) per month will end in 11-19 and is not inmy state of residence – NH. After Federal, State and property taxes I have very little left to pay for living expenses. Cannot afford rent and living with our grand daughter rent free – had to cancel supplement health insurance – cannot afford. In all of this we have $ 20k in medical bills for my husband – pre Medicaid. Beginning to seriously consider alternatives involving drastic results. Obviously credit scores mean nothing to me. Thank you for reading this.

    • Michael Bovee says

      Inza – Are you currently making credit card payments? If not, in what month did you quit making them? If you had no credit card payments at all would you be able to afford your supplemental insurance and other bills? What amount of money would be left over after all other needs are met (when not making credit card payments)?

  25. Dallas says

    Hi Mike, I am caught in a bad situation through a business deal gone very wrong. I currently have 12 credit cards that I am paying now totaling about $130k, down from $155k. Total I pay per month is around $3k. I am only able to pay the minimum payment and have been on time each month for over 3 years now. However, with the CC payments as high as they are per month & no end in site, it is strangling the growth of my business. I am operating at about 85/15 debt/incime; with no cash flow to help my business grow I can only maintain. Another issue is that the credit cards are all personal CC’s & in my parents name, they went on the hook for me (although at the time we didnt know it was CC), alot of bad business was done without our knowledge. Anyway, I stuck with the business & am now stuck with the payment and no real end. A hardship plan has been a consideration of mine, but do you think that it will be enough? Or is Bankrupsy the best option? Any help or advise would great.

    • Michael Bovee says

      You have options if you are able to make those payments still. With your folks being the ones with the credit cards in their names, they are going to be a big part of the decision and implementation.

      List the creditor names and approximate balances (round to the nearest thousand).

      You could perhaps get the monthly payment down to 2700-ish.
      You could settle these debts quickly, or at least some of them quickly, and others can be settled one by one over the course of as much as a year or two.
      Your parents will be the ones filing bankruptcy. They may not qualify for chapter 7, but if they do, that is going to look real good. If they can only do chapter 13, lets compare settling with that.

      Do your parents property? A regular income? Savings?

      I look forward to helping you come to grips with whats next with all this, and moving on to a positive future.

  26. Geoff says

    Hello Mike,
    Thanks for this super resource.
    I just completed two five-year hardship plans–one with Chase at 6% for $8000 and and one with BofA at 4% for $16000. I probably could have gotten a better rate i f I’d known to negotiate or navigate the situation better as you discuss here. I was originally advised to consider bankruptcy as in my field–teaching and massage–income tends to be modest. However, I just was not comfortable with that option so I dug in. These were tough financial years as I worked to turn my habits and some challenging situations around.
    I have one credit card remaining that I’ve been paying the minimum on–with Citibank, now at 10.9% with approx $17,000.
    My goal is to eliminate this debt.
    Besides paying the two other debts off, my financial situation is no better than it was.
    My question: Would you recommend I call citibank to negotiate for a long-term hardship in order to improve the rate?
    My credit is 700+.
    Secondly, if Citibank closed (or even if not), I’d be looking to get a credit card to have some credit available as this seems important to maintain a decent credit rating. If you agree with that, would you suggest getting a new card before or after negotiating with Citibank?
    Thanks for any thoughts on my situation.

    • Michael Bovee says

      Citibank is not likely going to reduce the interest rate much more than you have now. I could be too skeptical though. If you can make a good hardship impression, you may get them to go the distance, and even reduce your interest to half or less than what you have now. But some of that decision making is going to come from stuff they see about you on your credit report. And for that reason, I would try to get the interest rate reduction before applying for any other credit.

      If you cannot get the interest rate reduced, apply as much of an aggressive debt roll up strategy to this last debt as you can. Keeping the account open would be the best thing for your credit now that two other seasoned accounts with Chase are paid and closed with no regular updates to your credit any longer.

      How much over the minimum payment will you be able to make on average each month?

      • Geoff says

        Thanks for the response.
        The total balance is actually $18000. The current minimum is $340.
        After a very low point, I took a restaurant job at night to increase my income. I am on austerity/minimized budgets for just about everything else. I can handle right now $400/month. At this rate, it will take a very long time to pay off. I will call them tomorrow and make my very best case for a longterm hardship. And will hold off on any other credit pursuit until after that as you suggest. If I don’t get better terms, I will have to consider other options–balance transfers? settlements? loans? Thanks for your advice Mike. Again, I appreciate your response.

          • Geoff says

            Well, I did my best. I spoke with several people until I got the right department: Citibant Client Assistance Unit who deal with hardship programs and settlements. Their response: Unless I’d had a death in the family or some other traumatic incident, they would not consider–this is their policy– hardship or forbearance until I did not make a payment in full. They said call them after the next payment cycle if I did not pay it in full in order to be interviewed and discuss further.
            So much for being proactive. In order to negotiate, I’d have to be vulnerable to getting hit with higher APRs, late fees and credit hit. And who knows what the negotiations with them would look like. Is this an incentive to stop paying in general and negotiate a settlement later? My options seem to be: 1. Status quo, doing all i can to keep up with payments while on austerity 2. Cut payment in order for them to negotiate some kind of hardship–i am very doubtful this would be longterm helpful after this first conversation 3. explore balance tranfers 4. cease payment short term and take the credit hits/calls etc looking at debt settlements months down the road while working and saving as much as possible. I have ten days to research aand contemplate the next step till the payment is due. Any thoughts? Thanks Mike. Despite the challenges, very glad to be moving forward on this and ending this cycle. Best

            • Michael Bovee says

              I would not call it a Citibank inspired incentive to stop paying and look for later affordable payment or settlement opportunities. I would more accurately describe this as bank policy to manage account holders who have life happen, but at a scalable level for Citi.

              If you found a balance transfer offer be sure and calculate all costs, as the math may not add up to much long term benefit. And if you balance transfer, but later think of settling an unseasoned account whose balance is wholly made up of a balance transfer, those do not negotiate nearly as well as seasoned accounts with original creditors, or fist line debt collection agencies.

              Let’s say you did want to settle the debt with Citi bank, as opposed to accepting one of the lower payment hardship plans they will likely offer after your first or second missed monthly payment. How much money can you put your hands on in the next 6 months (get creative, borrow from family/friend, sell a bike, etc)?

              • Geoff says

                Mike, Thanks for your perspective. The challenge for me is that I have tapped many of those resources to pay off the two previous debts–sold car, staying extended periods at cut rates at friends’ and family’s places, getting fronted funds from family waiting on funds owed to me etc–and need the income I have to get my own place and move forward. I’ll brainstorm and talk to more folks and consider my options then lock in best I can. The main goal for me is to get a plan in place that I can manage so that I can focus on other important parts of life. Unfortunately, I still have this sick feeling when I think of the conduct of many of these financial institutions and am certainly compromised having conducted my finances in this manner.

                • Michael Bovee says

                  You likely will be able to settle this for less than the balance owed after some time of non payment. Read through the first stage debt settlement sections of the site starting here: http://consumerrecoverynetwork.com/credit-card-debt-settlement-program/.

                  If you are not making payments, and the hardship payment options are not in the cards, saving up to settle for roughly half the balance, and as quickly as possible, is the next step to consider for many. You will learn two critical time frames and how to view them, when you read through the debt settlement sections. If you do not settle with Citi bank prior to 180 days non payment, you will likely be negotiating the account with a debt collector after that.

                  Hardship payment plans are fairly non confrontational, as you know. Debt negotiation is more of a pressure situation, but the pressure is what it is, and can be managed by getting informed, and keeping your eye on the ball (the amount you need to accumulate over time to finally settle the debt).

  27. Ashley says

    Hello, Michael!

    I just stumbled upon you last night and am so grateful for your space. Thank you! This morning I woke up to an alert from Chase, reminding me that payment is due in 10 days, so I wanted to get your advice on my situation.

    Card: Chase United MileagePlus Explorer Card
    Card Opened: September 2011
    APR: 14.24%
    Balance: $13,321
    Minimum Payment: $289
    Payments are current (one late, and called to get late fee removed after payment posted).

    A year ago, I realized it was time to tackle the debt. I decided to stop using this card (only a handful of charges have been on this in unique situations) and also paid off another Chase card, which only had a balance of $1500, but an APR of 29.99%. That card is paid off, and I plan to close it though I know Chase convince me it should stay open.

    For the “big card”, I met with a lawyer earlier this year to consider bankruptcy. He said he wanted to think about it, as I wasn’t a for sure file now situation as it may not be best to have bankruptcy hanging over my head at my age (I’m just 30). I also tried applying for every 0% balance transfer cards, and unsurprisingly, I could never be approved.

    I’ve been living in New York but am currently visiting family in California. As of mid-October, I am in between jobs, and will likely get something in the 45-50k range (60k would be ideal), once I do secure employment, which will be back in New York or here in California or elsewhere. Right now I have no income, so thought it could be good timing to enroll in a Hardship Program – though with no income, perhaps I wouldn’t be approved? Last month, I made my $300 payment and this was the first payment I made since I’ve been unemployed. At that time, I wondered if I should pay or not, so I called Chase on my due date. I said I couldn’t pay my bill, asked about the credit card hardship, got transferred, spoke to someone else reciting all the fine print. When they got to the part that I would forfeit all United miles, I decided I wasn’t ready to move forward. I could make the minimum payment last month and I still can this month. I have a few thousand to hold me over until I’m employed again, though don’t want that all to go to my credit card as I will be moving somewhere new and have money saved for the expenses of establishing myself somewhere new.

    Besides my “big card” that I ambitiously want to pay off in about a year (pending future paychecks), I have a student loan with a minimum payment of $130 a month, with a grandfathered APR of 4.25%. I’ve got $10k there, but am fine with that being on the extended payment plan, it’s the credit card I am determined to eliminate.

    I think I am leaning towards a credit card hardship program, to allow for the (hopefully) 0% APR, but have many questions and am certainly open to your suggestions if bankruptcy or offering a settlement would be better for me.
    1) If I want to do the credit card hardship program, would I have to be late on payments?
    2) Would I only be approved for the program if I had an income? (My checking account is with Chase… they can see my balance isn’t zero).
    3) Would I for sure lose my United miles? I asked the agent on the phone if I were to book an itinerary and go into the hardship program before the departure… would the itinerary be cancelled? They said to call customer service to ask, which I’ve yet to do.
    4) Is there a way to negotiate with Chase to enroll in the Hardship Program without closing the card? Perhaps that would avoid the forfiture of miles. If I do have to close the card, would they ever approve me for it again?

    As for settlement, I could hand over half the balance soon, if Chase would accept 50%. Would it be best to try to negotiate this myself and would I have to be behind on payments?

    I am excited to be debt free and thank you again for your guidance.


    • Michael Bovee says

      It can be a challenge to get your credit card banks to agree to enroll you in a hardship repayment plan if you do not have an income. You can overcome that challenge if you convince them a friend or family member is going to front the money each month to cover the bill until you land on your feet.

      I cannot say whether it is certain that you lose the United miles you have. I think it likely you lose them, given the credit card customer service rep has that disclosure in their talk off.

      You are not going to see that great of a monthly payment reduction on that last credit card. 222 is as good as it would get, and that is with Chase reducing the interest rate to zero. Is that workable?

      How many United Air miles would you lose, and what would it cost to replace those by purchasing tickets?
      How long would it take you to come up with roughly 5k to settle with Chase as an alternative to hardship payments?

      If this one credit card is the only reason you would have to file chapter 7 bankruptcy, and given the fact you can potentially settle it for 4 to 5 thousand, I would not be a fan of bankruptcy for you. Not over what amounts to 5k.

      Chase has not been a black list bank, like how American Express treats prior card members who default, settle for less, or who include their accounts in bankruptcy.

      You will be able to settle your credit card directly with Chase,or with the collection agency they first place your account with. And likely for a good amount less than 50%. You will not want to settle too soon. The best settlement deals often come between 150 and 180 days late, and sometimes right after 6 months late. Read through the first stage settlement sections of the site to get a good understanding of how and when to settle direct with your bank.

      I would recommend not having much money in any Chase checking or savings account until after your settlements are completed.

      I also recommend reading through the last several critical reports I list here: http://consumerrecoverynetwork.com/debt-relief-program-reports/

  28. Greg Patrick says

    What happen is our regular bills doubled which is making it very hard to make credit card payment and get groceries. Are household income went down because a job program she was has ended and now she had a medical problem preventing her from getting a job. As for me, I am also disabled. We are both on Social Security, we are not married. The BK Attorney told us just to stop paying the credit cards because we are both on Social Security which is not garnishable and we are not collectable and let the have a judgement against the house. We have a low balances with some high minimum payments, if we could get them to cut the interest and the minimum payment in half we could continue paying the bill, there is a very small chance she could get more money if she doesn’t die before her ex-husband dies. 6,000 5,000, 5000 hers, mine is 4,000, 4,000 . Another thing he told us, is since the house was discharged under the old bk. He said stop paying and use some that money to pay the credit cards tell the bank kicks you out. The house is underwater. What do you think we should do?

    • Michael Bovee says

      If your credit cards are not yet 4 or so months overdue, call the debt relief hotline 855-340-0589 and choose the first option to speak with a counselor. During that phone call you will be looking into how much your interest rates can be cut, and therefore you monthly payment lowered, by working with a nonprofit counseling agency.

      Post an update with that you learn and lets go from there.

  29. Blondie says

    I have a B of A credit card that is 180 days late. I spoke with a rep from B of A today and they spoke with me regarding a hardship program for the 15k I owe them (including late fees). I was told that only including my B of A credit card doesn’t qualify me for the hardship program. However, if I include my husband’s B of A card (it is not delinquent) I would qualify. If we agreed to this, B of A would close both our accounts, reduce our interest rates, & we would be able to pay off both cards in 5 years. I asked them if the hardship would affect our credit scores & they said yes but weren’t sure to what extent. I am trying to determine if we should go with the hardship agreement and pay the roughly $490 a month or if I should start making payments to them to get caught up & pay the monthly minimum on both cards (mine $400 & husband’s $325). I looked at my credit report & B of A is already showing my account closed $ my credit score is 623. My husband’s current score is 634. Any help is greatly appreciated. We are just trying to do the right thing & pay what we owe while still trying to survive.

    • Michael Bovee says

      Given your last sentence, and your already average credit scores, I would encourage the hardship payment plans BofA is offering on both credit cards.


      Are there other credit card balances than these?
      Do you have any specific credit or finance goals in the next, say two to three years, like a home loan or refinance?

      • BLondie says

        Yes there is additional debt between 2-3k averaging $250/month. My plan would be to take our income tax return & pay this off then take the money we are saving each month & apply it to the hardship loan. I was hoping that it would be favorable for our credit scores.
        Our biggest goal is to pay down/off our debt to where we feel like we aren’t drowning. Also, to increase our credit score.

        • Michael Bovee says

          The impact to your husbands credit score will likely be neutral, though if BofA reports it like they do a DMP (debt management plan through a credit counselor), your husbands account could show it is enrolled in a managed payment plan, which will not look great to a manual underwriter.

          Your account is already showing as past due for several 30 day intervals in a row. Ask the Bank of America rep you next speak to about the hardship payment plan if they will reage your account like they do with credit couseling plans, so that you do not appear to be late in perpetuity while making your new agreed payments on time.

          Long term, this is favorable to your credit. Short term, say this year, maybe a a couple point difference.

          I asked about your near term credit goals for the next 2 to 3 years because your answer may mean I have additional feedback for you to consider.

  30. Blondie says

    We have two cars that are leased which will end in 15 months & 27 months. We had thought about refinancing our mortgage & second mortgage but we were trying to get one beast under control first.

    • Michael Bovee says

      Thanks. My perception would not change with this information. I would take the hardship repayment plans with BofA. The tax refund being used to pay off other accounts will help your debt to income, and perhaps credit utilization too (which could bump your scores a tad).

  31. mike says

    Hello MIKE
    I joined a debt management program in October 2010 Bank of America and Sears/Citibank. Sears account was 2 months behind Bank of America was 3 months. Have never missed a payment since being on the program and finally I have about 6 months left on program and balance on both accounts will paid in FULL. I look at my credit report every year and notice that TransUnion and Equifax show the account for Bank of America are “current” and “pays as agreed” but on my Experian report it shows Dec. 2010 Jan, Feb of 2011 late.

    My Sears/Citibank account shows late payments from Dec. 2010-Sept.2012 on all three credit reports which was also on DMP in Oct. 2010. I call Sears/Citibank they told me since account was late when starting program that I had to caught late payments up and then account will be brought current but it has never been reaged. I have the written agreement when joining the DMP and also copies of all payments made 10 days before due date to Sears/Citibank. Even if I had to bring late payments current it seems to me that the account should be reaged to current. In the pay status line it states “current” “Paid” or “Paying as Agreed” what should I do it”s hurting my report

    • Michael Bovee says

      What is the name of the credit counseling agency you enrolled in the debt management plan with?

      Are there no late pays after 2012 being reported?

      Do you know your current credit scores?

      • mike says

        Careone credit counseling.
        No payments miss/or late after 2012
        credit score 683
        On EQUIFAX, Transunion, Bank of America only report back to July 2013 going forward to Feb.2015 no lates paying as agreed
        Experian reports from Feb. 2008 -Nov.2010 no late again Oct.2010 join DMP Dec.2010-Feb.2011 late payments. March 2011-Feb.2015 no late. don’t understand how i could have a late in Nov. 2010 when 1st payment was mailed Oct.10,2010 and received at B of A on the 22nd of Oct.2010

        Sears reports 10/2007-11/2010 no late. 12/2010-09/2012 all late.The 10/2012-02/2015 all current on payments that account also started DMP in Oct.2010 why is there that many late

        • Michael Bovee says

          It could be that your payments through Care One were not administered properly, or that the banks crossed wires with how they reaged them. I think the latter most likely.

          A 683 is not all that rough a credit score with those late pays. They may not be hurting you all that much at this point. What are your plans to rebuild active credit accounts after the DMP? Do you have open accounts that were not enrolled in the DMP that continue as positives today?

  32. mike says

    My plan is to finish paying off the current balance on accounts.Ask my wife to add me to her Kohls account which has $500.00 limit and $76.03 balance so it can report on my file to show a new account with activate.Ask B of A again to remove the 3 late off Experian report. Try to apply for a gas card to rebuild credit score back to 720 when I bought my house in 2005. My rate at that time was 5.5% finance with B of A.

    Apply for small loan at my credit union for $1000.00 also to get information on file

    • Michael Bovee says

      You will be in better shape 6 months after accomplishing all of that, and it would those plans I would focus on, not the late pays.

      You can send a good will request letter to Bank of America asking those 30 day late pays to be removed from your credit, but I would not have any expectations of that succeeding. I would do it too, just like you will be, but because it is worth the price of postage to throw a Hail Mary.

  33. DB says

    Hi Michael,

    Following up from a post from a year ago…at the moment this area of your site seemed the right spot. I am still in debt on several credit cards. I became employed around 6 months ago so that has helped a lot, but of course high interest on some of my cards keeps me from making much progress. Pretty much making the minimum payments or a little more as I can.

    This month is the first time I am going to be late for citi…I called and asked for the hardship department and the rep said call next week on the day the payment is due and they will discuss options. I think I will end up in the credit counseling program soon enough but I am still trying to hang on to the my care credit for medical expenses I am incurring.

    I am hoping for some of sort reduction in interest as this card has 20 percent. It has a 6,000 balance. I know they will require me to close the card…can I try to get them to report as closed by consumer? I am sure my score is going to go down from here…but I am weighing that against the heavy load of debt for a lifetime. I also wonder how this will effect the cards I am current with. Any feedback will be appreciated.

    Your website is such a great support to me…

    Thank you,

    • Michael Bovee says

      You can call them and close the account yourself. That may save you a couple of credit score points, but it really is negligible (the difference between closed by credit grantor and closed by account holder).

      Have you talked with a credit counselor about all of your bills yet? If not, I would want to do that before I call Citibank to talk to them about their hardship plan. It is good to avoid having one account in a hardship plan direct with the credit card lender directly, and then later consolidating your credit card payments with a counseling agency. You can consult with an agency through my hotline at 800-939-8357 and then choose option 1.

      • DB says

        Thanks so much for your reply Michael…I called for some advice thru the credit counseling but I will need to call back to go over the details with a counselor…I have a feeling my income is not going be enough to even qualify me for a monthly plan compared to my total debt.

        A couple of my cards are fairly low interest that is why I thought maybe I could work with the higher interest ones to reduce. I know. I am going to be late (maybe only a couple of days) with my minimum…I didn’t realize that talking hardship plan could effect my being able to do credit counseling payment later.

        Now I am unsure how to proceed, but thank you so much for informing me about this….

  34. TJ says

    First off, let me say thank you for offering this forum as a resource. We are completely overwhelmed on what the best route for us to take is & every website offers a different view, so it will be helpful to get some advice from someone who deals with this daily.

    We purchased a home 3 years ago and have had several unforeseen issues that had to be fixed w/ our home. Our son enrolled in college 2 years ago in a state across the country from us. We spent a lot of money flying back and forth when he decided after his first semester to transfer to a school in our state. My husband was out of work for 6 months this year and we had to put things like groceries and other payments on credit cards until he was back to work. We did not foresee all of the extra cost these 3 situations would add to our budget.

    We used credit cards that had 0% introductory rates and now the interest rates are all adding up very quickly. Up until now we have been able to scrape by and make all of the required minimum monthly payments, but we have reached our breaking point. With our current finances when we include our utilities, mortgage, car payments, car insurance and all of our credit cards and their minimum payments we are $572 short each month. My husband & I have both started working 2nd jobs to try and bridge the gap, but it still doesn’t get us there.

    We currently have $40,000 in credit card debt on 7 accounts that equals a total of $1065 each month with their minimum payments. The accounts are:
    Sears Citibank: @ 20.4% apr w/ $235 min. pymnt
    Simplicity Citi: @ 17.99% apr w/ $196 min. pymnt
    Thank You Citi: @ 12.99% apr w/ $173 min. pymnt
    Home Depot: @ 21.99% apr w/ $150 min. pymnt
    Chase Southwest: @ 15.24% apr w/ $111 min. pymnt
    Barclay LL Bean: @ 13.99% apr w/ $105 min. pymnt
    CapitolOne Quicksilver: @ 22.9% apr w/ $40 min. pymnt (0% apr ends in 8/2015)

    We called ACCC services and they immediately offered us a DMP that would cost us $991 per month for 5 years. Although it would be great to have all debt paid off in 5 years, it still wasn’t affordable to us.

    I also watched the webcast where you interviewed Charles Phelan & we considered going that route. But based on his 12 month plan, I’m not sure we would have the lump sums for payout at the required times.

    Another factor that we aren’t sure how will impact us is that we have taken out Parent PLUS Loans to subsidize our sons college education with what isn’t covered by scholarships/grants/student loans. He has 2 years left and we’re not sure if any of these credit card issues will keep us from being approved for the Parent Plus Loans.

    We started researching hardship plans, thinking this might be the way to go. We were hoping to contact the 7 lenders and set up a hardship plan for 12 months where we would pay them each 20 per month for 12 months & then after that period, continue paying them their required minimum monthly payments. In a year we have a secured loan that will be paid off (freeing up $214 per month) and a 401K loan that will be paid off (freeing up $457 per month). Once the 401K loan is paid off, we could also take out another loan from my 401K that could also help payoff the debt. And during that year we will have had additional funds via our 2nd jobs.

    We started out calling the Cit Simplicity & Thank You card. The gentleman we spoke to was very helpful, but said because we were customers in good standing that we wouldn’t qualify for any hardship plans until we missed a payment & that we should call back after we miss a payment. When we called Barclay, they were not as helpful, simply referring us to three different websites that had to do with bankruptcy. After that, we have put the calling on hold, since we haven’t had any late payments yet & it seems based on what I’ve read so far, that once we have a late payment, they’ll be calling us.

    So…my question is this: Based on the details of our situation, do you think using the hardship plans would be best for us? Do you know if any of these companies have a history of not allowing hardship plans? Will any of this keep us from getting a Parent PLUS Loan? Is there something else you would recommend?

    • Michael Bovee says

      All of those creditors have hardship plans they can offer to you. The repayment plans could vary in lengths and amounts you must pay. None of those creditors will let you pay as little as you would like to, and you are most often going to need to make the minimum payment that at least amortizes to a 60 month pay off of today’s balance. That means as it good as the hardship plan may get will be $167.00 on a $10,000.00 balance over 5 years.

      If you got each bank to give you zero percent for 60 months (they cannot go any longer than that), you will need $667.00 a month. With the $572.00 you are short each month, accomplishing this could get you through until some other money frees up.

      How likely is it to get all the banks to go to zero interest and offer the 60 month hardship program? Not very, but you could get closer than what American Consumer Credit Counseling quoted you. Did ACCC do a full budget consultation with you?

      If you get where you need to be on each account, and make that work until other money frees up next year, you are good to go and could use an aggressive get out of debt strategy with that money.

      You will find that your credit cards will offer the best payment plans that you qualify for when you miss a payment or two. Your credit is going to take a hit from this, but that will be a month from now if you are current with all your payments. I do not think a few 30 day late pays will hurt your plus loans that will likely fund this summer. But you can make another months minimum payments if possible, and then fall behind in order to see what reduction you qualify for.

      I would encourage you to buy the debt settlement success seminar from Charles. I think once you listened to it (it is the best on the market bar none), and using an estimate for settlements with those credit cards you have, you could be done in 18 months or less. Settling your debts is the mathematically superior choice if you leave chapter 7 bankruptcy out (I am not bringing that into the discussion because it would likely prevent you from being able to get the plus loans next year).

      I would suggest you call me for a consult. I can go into some creative steps you can take, that are consistent with your goals and abilities, but will need some additional information from you. You can reach me at 800-939-8357, press option two. You can also email the address you get these comment notifications from with your number and some times you are available this weekend.

      • TJ says


        Thank you so much for the comment & most importantly for the time you spent on the phone with me today (on Father’s Day, no less!).

        The most important thing to us at this point is qualifying for the PLUS loan for our son’s education. He has 2 more years left and I was looking for a way to make it to August of 2016 without having to take any action that would impact our credit. We’ve had some time to come up with several options(that’s what happens when you spend 3 days straight researching & looking under every nook and cranny for solutions…but not sleeping!), but we’re shooting for Option 1.

        What we’ll be doing for now is using the available credit left on our cards to get us through to January/February, as well as both my husband and I picking up extra shifts at our 2nd jobs. Once February comes, we’ll have our tax refund to carry us through until August 2016 (when the next PLUS loan application will go through.

        As soon as we’re in the clear with that, we plan on working some short term hardship plans to get us through December 2016, when my 401K loan will be paid off and I can borrow against myself again. Then it will be time to start the debt settlement process.

        If all goes according to plan, we will be credit card debt-free before the end of 2017. If there are bumps in the road, we’ve got Option 2, which is to work with creditors to get some long term hardship plans in place, that will carry us through until December 2016, when we have access to the 401K loan to use to pay off any debt settlements.

        If that fails, we’ll go with Option 3 and start the debt settlement process. If Option 1 or 2 impact our ability to qualify for a PLUS loan, we have the ability to take a hardship loan out of my 401K that can pay for his last year of college.

        Thank you SO much for talking me through all of the pros and cons of these options. I will definitely keep this thread posted with how this all turns out so that others can see & learn from the experience. Here’s hoping for a happy ending:)

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