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
Short answer
The Chase hardship plan is the right choice only if you are confident you can make a payment of roughly two percent of today’s balance, on time, every month, for up to five years. If your income is unpredictable, compare it against settling, because missing a single payment usually ends the plan.
Key points on this page
- Chase hardship repayment plans can be temporary, or run as long as 60 months, at a reduced interest rate the whole time. Chase mostly offers between zero and 10 percent.
- Miss one payment and you typically lose the benefits of the plan and go back to the old payment, even 18 months in.
- If Chase will not approve a long term plan, a nonprofit credit counseling agency can often get a better rate reduction and a lower payment across all of your cards at once. Talking with one is free.
- Many people fund a settlement by saving up the money they would have put into a lower monthly payment over 6, 12 or 18 months.
- Chase typically charges off an unsecured debt after 120 or 180 days of nonpayment, then places it with a collection agency or a collection law firm. Chase stopped selling unpaid accounts to debt buyers in 2013.
- You are far better off settling with Chase directly, or with a collection agency working for the bank. The worst settlements tend to come from attorneys collecting for Chase.
First thing to do is consider your current and projected income. Does your budget suggest you can afford a lower Chase credit card monthly payment if the amount was roughly two percent of today’s balance? Are you confident you could keep up that same payment to Chase for 5 years until the balance is paid off?
If you can swing the new lower payment to Chase with confidence, the reduced interest hardship repayment plan is a good program for you.
These hardship repayment plans can be temporary or last for as long as 60 months and carry a lower interest rate the whole time. How low of a hardship plan interest rate will Chase approve? It depends. I mostly see Chase offer between zero and 10 percent interest. This is in line with many major banks hardship repayment plans.
Up to 60 months to make a lower monthly payment is great! Or is it?
You have to be confident you can make the lower monthly payment on time all the time. If you miss one you typically lose the benefits of the plan, and your payments go back to where they were. This means if you were paying for 18 months and suddenly had a random set back or expense causing you to miss a hardship payment to Chase, they could kick you off the plan. If your income is unpredictable, this could be a major concern for you and you may want to compare the monthly repayment plan with a debt settlement approach to your Chase account.
What happens if Chase will not approve you for a lower interest rate?
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.
There could also just be something particular about your account where it will not qualify for long term hardship payments offered to you direct from Chase.
Here is a work around.
If you are looking to get your credit card monthly payment lower with not just Chase, 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. 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.
Chase and different debt collectors.
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 of late payments is not an option, there are different details to learn in order to be successful with your Chase credit card settlement.
Chase will typically charge off an unsecured debt, such as a credit card, personal, or business loan, after 120 or 180 days of nonpayment. Once charged off, Chase could send your account to a typical collection agency, or to a collection law firm.
While Chase has sold unpaid accounts to debt buyers historically speaking, they stopped doing that in 2013.
I consider it an imperative to watch this updated video of mine that covers how much has changed when settling with Chase bank.
You are far better off settling with Chase or a collection agency for the bank. The worst settlements tend to come from attorneys collecting for Chase. This is what I mainly want to help people avoid.
I would encourage you to schedule a consult with me directly, you can call me at 800-939-8357 and press option 2, or you can submit a consult request. I will review your projected cash flow and help you better identify how and when to settle with Chase successfully.
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.
Hi,
I owe Chase credit card 10,000.00. they are charging me higher interest, which makes my life very miserable and I just wanted to get rid of them, I would like to settle with them, what would be the best way to communicate with them.
What are my option ? Please provide your advise
Thanks
Are you behind on your payments to Chase? If so, bu how many months? What is the interest rate Chase is charging?
Hi Michael,
Presently my only steady income is SS of $1020 per month I occasionally get some part time acting work nothing steady. My rent alone is $700 per month I’ve gone through my savings and IRA. My Chase balance is $13,452.95, interest is 12.49% min payment of $279 is due on 10/22/16 I don’t have it. I also have a BOA card I owe $16,183.51 interest rate is 7.49% min payment was $257. I’ve missed the Oct. payment. I called and told them I’d be late however, I can;t afford to pay it. What the hell am I going to do?!
If you cannot pay, you don’t pay. There are debt relief options to consider.
I would probably start by consulting with a bankruptcy attorney about your options with a chapter 7.
Hi Michael, my husband and I want to buy a home but my husband has a chase card that he hasn’t paid in about a year. I think it went into collections but I’m not sure with who, he rarely gets calls from them anymore. He owes 2,100. I know it needs to be paid to qualify for a house but do you think they will take less than that or do I have to pay the whole amount for them to consider it paid?
You should be able to get it settled for less. Call Chase and find out which collection agency they have it out with currently. Post who that is and lets go from there.
I just called chase and they said chase is handling its own collections so I guess they never sent it to another company
Hi sir. My chase credit card is in collections and past due since 2011. I went through a bad financial hardshipand couldnt pay it. Now since im currently trying to buy a home chase wont let me make a payment plan bc the account is so old and only gives me the optionnto either settle or make faith based payments. They offered me a settlement of 2700 but i dont even have that. I really need some help bc i need my credit score to be higher to require a home loan. Thanks
What is the balance owed on your Chase account?
The best settlements with Chase come before they warehouse your debt (which is what they have done). Sometimes you can engage in good faith payments and still get a home loan through after you show 3 or more months of payments. But I would talk this over with your loan officer or a mortgage broker before you go about the payment plan.
Do you have to be late on payments To Get Hardship reduction?
Will Hardship reduction damage my credit score?
You have a shot with Chase agreeing to a hardship reduction to your monthly payments while you are still current. Check out that article for more on what to be prepared for.
Hardship plans do not hurt your credit score per say.
I have been contacted by Alltran Financial to pay a Chase Credit Card that I haven’t made a payment on since February 2016. Should I at least talk to them and tell them I’m saving money to reach a settlement? I’m hoping for 50%. I’m nervous about taking to them. Past due amount is $4,077.35.
How much do you have saved up right now?
I have $1,000 saved up right now. I can afford to pay them now around $700 / month. Should I call them and see if they would do a payment plan? For the whole amount or see if I can settle for less?
I would wait until you have another $500 saved up and then tackle settling with Alltran.
Alltran should have the account for a total of 2 to 3 months. Do you know when they got it?
Do you have other debts to resolve than just this one account with Chase?
Sept 8, 2016 is the notice that I received from them. I have one other credit card with Barclays that is coming current. I’m on the tail end of the hardship repayment plan with them. I also have a student loan that is current, that I’m working to pay off. That’s all. :-). 4K to Chase, 5200 to Barclays and 11K to Student Loan, after all that, I’m debt free.
Okay, thanks. You likely have 6 to 8 weeks to still work out the settlement with Alltran.
Hi Michael, first I don’t care about my credit report, my credit standing. It will be damaged, perhaps beyond repair, for some years, it’s OK. I have debt with BofA (12K), and Chase (10K). I’m 4 months into non payment on all cards. I sent letters offering settlement of 10%, maybe to the wrong addresses, but I’m sending again. I realize they probably won’t respond to those offers, but that’s all I can manage. My question is this:
While I am not concerned about my credit, I am concerned with not going to jail. I read somewhere that they’ve gotten clever with claiming to serve notice of being sued, but not really serving the summons. So people don’t even get notice they are being sued, and default judgements are won against debtors. But then on some technicality the court requires an appearance, which doesn’t happen, and then the person being sued all of a sudden has a warrant for their arrest out.
Have you heard about that? About people getting pulled into jail because of warrants issued on technicalities around non appearance for credit card debt suits? I ask because if there is no response to my offers of 10% then I will have to let them default totally, and take it to court. But if I’m not served for the court action, and there is a default judgement, I don’t want to get arrested for some related thing that happens thru the back door.
thanks for your answer.
I have hear about those kinds of things (bench warrants for not complying with a court directive). It is rare for that to happen.
You are taking this a bit too far. You will have opportunities to settle many months from now, but not for 10%. If you can take the time to save up more… along the lines of 20 to 30 percent, you may have a shot. How long until you can save up that much?
I went through a divorce a few years ago, lost my job and built up $19,000 on one chase card (SW) and $15,000 on another (chase Freedom). I have always paid the min. and continue to pay on time but have used the small amount of credit to pay off other bills. Therefore these cards have been essentially maxed out for last three years. I am finally in a position where I am making more money and have the possibility to continue paying off the min. without using the small extra line of credit. My question is around debt settlement (I am in the position where over the next 6-8 months I can potentially save up between $15000 and $18000). Since I am technically not in a hardship anymore do you think I could negotiate my current total down? If so, how badly does it affect my credit if I do? Right now even though my credit is super high comparable to my income by credit score is 662. I would like to buy a little house at some point but if I settle does that mean I am screwed with my credit? Any input would be so much appreciated. Thank you so much.
Your credit will be impaired from settling debt. It is not necessarily the act of settling that hurts your credit score. It is the fact that you have to be late with payment before Chase will offer a decent settlement. This often means have 30 day late pays times 6 (at least).
How soon is it that you are looking at shopping for a home? Settling both Chase accounts does not mean your screwed for a home loan, but the timeline for your goal matters. I can offer more feedback when I know that.
I have an account with chase, have had for at least 10 years, our Balance is around 15,000 and a citi Balance of 10,000. As a result from paying off some bills and home improvements, our plan was to refinance our home to pay off both cards but just 2 days before closing our bank stopped the refinance so we are stuck with the debt and the payments are overwhelming and we aren’t getting anywhere with them. My concern as far as hurting our credit is I have a lease on my car that has to be paid in 3 years, I have to get a loan. I’m afraid by joining any program it will hurt my getting a loan for my car. We are current on payments. I just don’t know what to do. We are soo overwhelmed.
What is your interest rate on the Chase account? How about with Citibank?
How short of making the minimum payment are you?
Is your income consistent?
Good evening Michael, I am a full time college student. I have a $7000 debt to Chase as a result of me making purchases for a friend and him not willing and not able to pay me back at the moment. I am trying to take him to court to get the money but that is not working out. What is my best option in terms of trying to pay off this debt to Chase? How do I go about negotiating a decent rate with them? Please advise.
Are your payments current with Chase now? If you are late already, by how many months?
Feedback when dealing with Chase accounts will differ based on your answers.
Sorry for the late response. I am not currently late with the payment. I go back to school next week so I will not be working as much money and I have to pay my tuition. What happens if I am not able to make the next payment or make that payment on time??
Call in for a consult to cover more of what to expect and how to navigate things from here. You can reach me at 800-939-8357 ext 2, or fill in the talk to Michael form in the right column so we can email each other to set up a good time to connect on the phone.
Does Chase credit card sue like Discover does ?
just wanting to know
Not even close. Discover sues frequently while Chase stopped suing in 2011.
Thank you for answering my question.
Hi, Michael. I had a Chase credit card that I defaulted on in 2010. In a year it will be off my credit report but I am trying to buy a house now and, unfortunately, I learned that the balance is counting towards my revolving debt with FICO as if it was an open account. Even though it has been closed for 6 years. I was sent a 1099-C cancellation of debt form and had to file to pay tax on $3,119 of forgiven/cancelled debt. They show the balance as $3,710 on my credit report. I have disputed this but Chase keeps saying the balance in $3,710 despite the cancellation of debt. So instead of 28% of my revolving debt limit, this old account puts me at %65 of my limit with FICO’s scoring model. So is there a way to get this removed. It seems Chase is being dishonest in that they tell the IRS they forgave the debt when in reality they haven’t. I am willing to pay the $591 difference between the old balance and cancelled amount if they would remove it. Any advice?
Chase can both forgive the debt through a 1099c and credit report, or at least that is pretty common today. I know where you are coming from, and I share your frustrations (as do many who have contact me about the same thing). But in order to get to the bottom of it you would likely have to litigate the issue, and that cost time and money most don’t have.
The debt can be settle with Chase still. You may have to pay in full. You could adjust or amend your taxes to account for this, and Chase is supposed to as well.
Hi Mike, I have been on payment terms with Chase for a while now, I believe 5 years or so, I have a $7k and a $10k debt with them and the account has been closed for years. If I am able to collect some funds, what settlement agreement would one in my position ask for. It is really putting a hurt on my family and we would like to reach a settlement price for both cards with them. What suggestions do you have for me.
How quickly can you raise 5 to 6 thousand dollars?
Realize that Chase does not settle for less, or typically allow for the best savings to be negotiated, when you are current. You generally have to fall behind several months with payments.
I have almost 5K in debt with chase. I lost my job 3 years ago and it has been difficult to get back on track, hence the debt has followed me since August 2013. I am currently in graduate school and I do not make enough money to pay for my monthly expenses. I currently lost my living situation and this will increase my monthly debt. I would like to get rid of this debt and be able to breath a little more.
Thank you for your time.
Is it that you can no longer afford your monthly minimum payment to your Chase credit card, or that you have not paid Chase for those 3 years?
If you are current, what the interest rate Chase is charging?
If you are in collections already, how long until you can pull together about $1,500.00?
I had a payment plan with Chase for 60 months – Laid off in September – called every month to let them know what was happening – I just found out they charged off my account and it went to ARS. I freaked out and asked for a settlement of 50% (1st Timer) of the $5549 due. Now I’m reading that they would go lower … can I call/email them back and ask for a lower amount? I really don’t have the $2775 for am I stuck with this? The payments are: $694 July 31; $694 Aug 31 and remaining balance $280 until paid off. I am still behind on bills like my house – 45 days every month … help please
If it were me I would call in to cancel the settlement if no payments have been taken yet. I would get other bills, like my home caught up, and then circle back with the next debt collector Chase sends this account to and settle with them for a better savings.
If you have any trouble let me know. We can help.
I called to cancel because they never replied to email, he made it seem like I would not be able to settle later, is that correct?
What happens next?
No. You will have opportunities to settle later.
What’s next is post an update, or call in for a quick consult, when you are ready with the funds to pay the settlement.
Hi Michael,
I have a balance of 22k (5-6 months past due) on a Chase Card that I am currently trying to settle. They had me talk to a credit counselor and we discussed my budget. I talked to Chase and they went to 10k and I requested 7k. They put me on hold and said that the settlement is off the table and that I only qualify for a payment plan due to activity in the last 6 months (My car died and I bought one 6 months ago). They said I have to pay $300 in 30 days or my account will go to the next phase of collections. The $300 will delay the process. I don’t want to pay the $300 and what next phase is there…..charge off? or my purchase of the car is past 6 months and I can settle then?
My wife settled with chase 9 months ago for 35%, so I was looking for the same deal. What do you recommend I do?…..wait it out or pay the $300?
Call me for a consult Jonah. The issue with pulling back any offer can sometimes extend into collections later on too. I am at 800-939-8357, ext 2. You can also fill in the “Talk to Michael” form in the right rail.
Hi Mike,
I have been following this discussion and it has been very helpful.
I have once chase business with 7k and one chase personal account with 19k. Charge off will occur in the next two weeks. About a month ago I attempted to settle for 20 percent down and they offered 30 percent which I declined. I have 5,200 to settle/
My questions are 1. Should I just wait for charge off in the hopes of a better result? 2. has chase resumed selling accounts? 3. if I can come up with another 1,000 will chase agree to remove the accounts from my credit report now or is there a better chance they will agree after the charge off?
Thanks!
You have no shot at Chase removing the accounts from your credit reports. You cannot pay them 3 times the balances owed and get that result. You can expect them to update your credit reports when the debts are resolved though.
You have a decent shot at settling for between 20 and 30 percent with the first collection agency Chase sends the account to if you do it right, and your situation suggests they go that low.
It sounds like you have to wait to get a better outcome because you are limited with the amount of money you can come up with. If that is the case, the decision to let this go to a third party has already been made.
I have been following up on a couple of things that suggest Chase will be selling debt again soon. I have seen some debts last paid in late 2013 show up with Midland Funding and Portfolio Recovery Associates, the two largest debt buyers in the country. Chase stopped all debt sales in 2013.
Hi Michael! I have a charged off balance of $2,233 on my Chase Rewards card. It was charged off July 2014. I received a collections letter a few wks ago from Client Services on chase behalf. I wrote them back a debt validation letter in which Chase responded that they own the account and confirmed the info provided was accurate. So i assume Client Services was assigned to collect the debt? I would like to settle the balance @ 25%. What are my chances of them accepting my offer?
Most debt collectors are not debt buyers. Chase paused selling accounts for a while now, but I expect them to start up again.
I do see Chase accounts settled for 25%. The balance is pretty small compared to the files I see get that type of deal. You have a shot at it, but a better shot at something between 30 and 40 percent.
Hi! Could gambling be a reason to give for settlement as well as overspending?
I’m trying to settle me chase. Thanks so much for your time!
How long has it been since you stopped paying your Chase accounts? Because I often encourage settling with a third party collection agency Chase uses in order to get the best outcome, the hardship, or lack of self discipline, may not become as much a part of the settlement process.
I do see Chase credit cards settle for less even when there were instances of card use at a casino. It is a rare file type, but I have worked a couple over the years.
I have about $8000.00 of credit card debt that is eating up my fixed income. Never have been late had cards over 2o years. just ready to closed them. I called a credit debt company but it doesn’t seem right. they will save me $1700. and I will have to pay $233 every month. for 27 months. they say I have to have an account balance savings of $4000. befor they will start speaking to my creditors, and not to answer my phone. it that the way it works?
That is how a debt settlement company would work with you, but is that really what you need?
Post answers to the following questions:
What are your balances and who are they owed to?
What are your interest rates on your credit cards?