Settling your Chase Credit Card Compared to a Hardship Repayment Plan
I am behind with payments to Chase now for 3 months. I was thinking to later settle the debt, but they are only offering to reduce payments and interest for the life of the balance if payments are made from my checking account in the same amount every month for 60 months.
Is this Chase hardship plan the right way to go, or should I hold out to settle this account?
—RB
First thing to do is consider your current and projected income. Does your budget suggest you can afford the lower Chase credit card monthly payment? Does your cash flow and monthly budget show you will be able to continue paying your Chase credit card for 5 years until the balance is paid off?
Balance liquidation plans and debt settlement are both available on a Chase credit card.
If you can swing the payment the reduced interest hardship monthly repayment plan is a good program for you. If you do enroll in the plan, be sure to inquire whether the 30-60-90 day late payment notations will be brought current on your credit report. Chase and other credit card issuers (like BofA, Citi, Discover, Capital One, HSBC) will offer what is called re-aging to account holders that participate in long term repayment plans. This is when your credit card is enrolled in an internal repayment plan, or as part of a consumer credit counseling services plan.
Re-aging is generally only done once during the lifetime of the account, and hardship plans are generally not offered again later, if you fall off of one.
These hardship repayment plans can be for 60 months and carry a lower interest rate. I have even seen zero interest rates on some credit card plans. 60 months to pay a lower monthly payment is great! Or is it?
You have to be confident you can make the now lower monthly payment on time all the time. If you miss one you typically lose the benefits of the plan, your payments go back to where they were etc. This means if you were paying for 18 months and suddenly had a random set back or expense, you are off the plan and have not resolved the Chase credit card. If this is a major concern you should compare the monthly repayment plan with a debt settlement approach.
Banks like Chase will change system wide policies for offering hardship repayment plans from time to time. One of those changes may be to stop offering long term hardship repayment plans (the 60 month lifetime of the credit card balance version), and switch to offering only the 6 and twelve month temporary hardship payments. Here is an article series covering hardship plans.
If you are looking to get your credit card monthly payment lower with not just Chase bank, but other banks like Wells Fargo, Bank of America, Capital One etc., it would be a good idea to talk to a nonprofit consumer credit counseling agency about what they can do for you. The credit counseling industry has long standing relationships with virtually all of the credit card banks like Chase and the others. An agency can sometimes get you a better interest rate reduction and lower monthly payment across all of your credit cards, rather than you just “one-offing” each account, and perhaps only being able to settle on 6 and 12 month hardship plans which can backfire on your budget when the payment and interest rate reduction expires.
Talking with a nonprofit credit counselor is free, and worth the information you will get, even if you do not go that route. You can speak with one today at 888-317-8770.
Settling Credit Card Debt with Chase or a Debt Collector
You mention you were thinking of settling your Chase credit card. What was your plan for doing so? What is the balance of the account now? How much money have you saved and what amount can you add over the next few months? Do you have additional credit card accounts that you are late with?
How much money you need to be prepared with will change depending on different factors.
If you took the money you would have paid in the lower monthly payment hardship plan and saved it up for 6, 12, or 18 months, how much would you have?
This is how many people settle their credit cards. By saving up money over a period of months. If you miss the opportunity to settle with Chase directly, after 6 months of non payment you typically will be able to settle the account with a collection agency.
In order to maximize your percentage savings in settlement and mitigate the risk Chase places the account for aggressive collection action, there are some things you need to be doing and things to avoid doing. If raising the money to settle with Chase in the first 6 months is not an option, there are different details to learn in order to be successful with your Chase credit card settlement.
I would encourage you to start reviewing my debt settlement series to get a sense of what settling credit card debt with Chase is going to look like for you.
If you would like to consult with me directly, you can call me at 800-939-8357 and press option 2, or you can submit a consult request.
Anyone reading with questions or concerns about Chase credit card hardship payment plans, or about settling Chase credit card debt instead, is welcome to post questions in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I have almost 48000.00 in credit card dept that I cannot pay as I have lost my job and on only social security. II am not sure what to do next or who to talk to. I am still paying my house note but thinking about letting my car go. I just need help
I encourage you to schedule a call with me here: https://calendly.com/debtbytes/15min
I can walk you through any remaining workable options you have to deal with the debt.
Hello sir. I have 12,371 balance on a Chase credit card I have had since 2008 and have never missed a payment (yet).
However several weeks ago I suffered a hopefully short-term medical situation that prevents me from working. My applications for short-term disability are still in process, so I have zero income at the moment. I will not be able to pay the minimums on my Chase or Citi cards at the end of the month (the Citi has a balance of 12,974 and unfortunately several monthly bills are adding to that balance right now).
Everything I have been reading about Chase is they won’t even let you enroll in a temporary hardship program with lower payments unless you have actually missed at least one payment? So should I bother to contact Chase and give them a heads-up that I can’t make the next payment, or just not pay it and wait for Chase to take action?
In reality I’ll probably never be able to pay off the full balances in the remainder of my working life as I am 55 years old. At least I have a roof over my head and food thanks to relatives, but my savings are depleted.
Or should I consider some type of debt settlement? If my disability payments start coming in I might be able to make small monthly payments into an escrow account or something.
Thank you.
If you are spread as thin as you are now, or even if you are back to work full time and not able to make headway on these debts, it could be time to consider filing chapter 7 bankruptcy, or settling the Chase card for less.
If you want to talk through what that all will look like you can schedule a call with me by clicking the talk to Michael box above, or the Get Help tab at the top of the page.
Hi Michael, I have $22,000 on my Chase card with an APR of 20.49% that I would really like to pay down through a hardship program. We have not made any purchases on the card for the past 2-3 years or so in hopes of paying down the balance. But the interest is killing us, minimum payment per month is around $600 and $400 of that is interest. So basically not making a dent in paying it down. I’ve called Chase twice to apply for their balance liquidation program and was declined both times. The first time I called, I didn’t realize I had to have all my numbers in front of me so everything were ballpark figures, and the expenses to income ratio was too high so of course it was declined. I called a second time a few months later, but I did my work beforehand and I had all my numbers. But the person who helped me was not very good, because he did not let me include some of my monthly expenses. He considered them non-essential, but for us they are consistent monthly expenses and I kept pushing for them to be included in the numbers, but he wouldn’t do it. I was initially pre-approved for a plan, APR of 12% for 60 months, (which isn’t great but it was something), but it needed final approval by a supervisor, and that’s when it was declined. The reasoning was that there is too much money left over after living expenses for it to be considered a financial hardship. My question to you is what is the magic ratio? I am so frustrated as to why Chase is so difficult with these repayment options, whereas I have other credit cards that were easily enrolled in these hardship programs. I was advised to apply again after 30 days, but I just wanted some insight as to what they’re looking for in terms of the numbers? Thank you.
I can help. You can schedule a call with me here: https://calendly.com/debtbytes/15min
Do you charge a fee for your consultation?
Yes, in some instances, but not the initial consult you would be scheduling.
I am in debt of $15,678.00 to Chase on my credit card at a 27.9% interest rate. I have never been late on payments, but my card is almost maxed out. Health issues and lack of Overtime have me in a serious bind on three credit cards. I called Chase for help. The first lady told me they couldn’t do anything until I was late on a payment. I asked for a supervisor. The supervisor did switch me over to collections and he said he could lower my payment from $450 a month to $260 for five years. My question is I’d really like to save up for four months of payments to pay a smaller medical bill balance of $1,200. Do you think they will give me the same option if I actually don’t pay for four months? I have 2 other high-interest cards at almost $30,000 that I need to contact as well. Was hoping to “NOT” pay for a few months to pay off my medical stuff first then negotiate for hardships with the other two cards as well. I don’t make enough money to save for a settlement or I would. What are your thoughts? Any help at all is appreciated.
You would be doing damage to your credit scores with this plan. I would try to work out low monthly payment plans on the medical bill first.
There are different ways to approach saving up for settlement with Chase and others. I invite you to schedule a phone consult with me to talk a little more strategy than you would find elsewhere.
If your credit is going to take a hit regardless, I would want to take the path that resolves my debts faster.
Hi friends,
I called Chase yesterday and found my way to Balance Repayment Plans. I have a small business—still running—with $43K in credit card debt to Chase, but that debt is guaranteed by me rather than the business. I’ve been paying about $1500/month in interest lately as the cards were interest free for a couple years but are now around 23% APR. I told Chase I was worried about the future of this as cash is tight with the business. The rep was great and walked me through the Balance Repayment Plan details. Here’s what I got:
– Balance on all cards could be added up and repaid over 60 months, with 0-12% added onto each payment (normally on the low end).
– Cards would be closed and not usable.
– This would cut my current payments (which are just interest) in half, and I would actually make a dent in the total with each payment.
– Rep said the impact on my credit score wouldn’t be too bad, since I’ve never missed a payment to date.
I said “sounds great let’s do it”.
Rep asked a bunch of questions: monthly income? monthly expenses? savings?
I took some guesses and she put them in her equation, then said I wasn’t eligible for the program, likely because the equation determined I could still make the interest payments.
What’s the strategy here? Do I do the math and report numbers such that I can only afford 1-2% interest and then report those numbers when she asks about monthly income, expenses, and savings? I learned that they also have this program online, so presumably I could just plug the right numbers in there?
Thanks.
I typically prepare people for that conversation with Chase over the phone. You can schedule the call with me here: https://calendly.com/debtbytes/15min