Have you become mired in credit-card debt that only gets worse every month as interest charges and sometimes late fees are added on? You're not alone.
What many people don't know is that many credit card companies offer a plan to help those stuck in a credit-card debt spiral. They just don't advertise it. It's called a hardship plan or credit-card payment plan.
Every company's plan is somewhat unique. However, basically it's repayment plan that allows consumers to make smaller minimum payments on a fixed payment schedule. Those who participate in the plan also benefit from having lower penalties and fees.
Credit card companies won't allow everyone who asks to take advantage of this plan. However, if you've experienced a temporary setback like a job loss or unforeseen medical expenses, you may qualify. These plans are generally more appropriate for people who just got off-track because of an event like these than those who make a habit of charging more than they can afford to pay back or have a multitude of unpaid debts.
If you're considering this type of plan, it's essential to talk to your credit card company about the impact on your ability to use your card and on your credit score. The company may suspend or even close your account until you've completed your payments as scheduled.
If the account is closed, it can negatively impact your credit scores. If the company informs the credit bureaus that you're participating in this plan, some creditors may view it negatively and others positively. It's important to find out just what, if any, notation the card issuer will provide credit bureaus that will appear on your credit reports.
Even if you experience a temporary drop in your credit scores, if you stick with the plan and don't get yourself in trouble with other debt, those scores will eventually edge back up. Making consistent, timely payments on a hardship plan will look better on your record than late or missed payments.
As noted, hardship plans aren't for everyone, and not all people with credit-card debt qualify for them. If you believe that bankruptcy might be a better option considering your overall debt situation, an experienced Tennessee bankruptcy attorney can provide important information and guidance.