It's not exactly a Get Out of Jail Free card, but credit card companies are increasingly offering various bailouts for debt-ridden consumers. That's good news for a lot of us.
With 20 to 70% forgiveness on balances, card companies are trying to cut their losses as the industry anticipates hundreds of billions of dollars in defaults by consumers this year. If you fear you won’t be able to make your payments, here is some advice as you attempt to strike a settlement deal with your credit card company.
1. Don’t Wait for a Collection Agent
It’s best to work directly with your credit card company as soon as you start missing monthly payments and before your issue gets turned over to a collections agency, at which point the creditor is paying big money to hunt you down (and they won’t be happy about it). The sweetest settlements are usually reached between 90 and 100 days after you’ve fallen behind, says Gerri Detweiler, credit advisor for Credit.com. At that point creditors may think you’re at the risk of bankruptcy and won’t want to risk never getting any money back.
Come up with a basic worksheet of what you owe and have that in hand when you speak to your creditor. Also, be clear and succinct about the nature of your problem, without giving the creditor all the details about your financial life. For example, a simple “I’ve been laid off and I owe $50,000 in debt” may be explanation enough, says Detweiler. “You don’t have to engage in a long conversation,” she says. “Keep your conversation short and to the point.” At the same time, you want to make it clear that you’ve made paying off your debt your top priority. Siler says it helps to say to the creditor, “I don’t want to go to a collection agency. What do I have to do to stop that?”