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The Credit Card Protection Insurance is Not Paying the Bill. – Val

“Dear Steve,

Daughters situation-Married, aquired 11,000 in credit card debt 2 years ago. Making all payments 300.00 monthly and also fell for insurance which is supposed to pay if you are ho[pitalized or unable to work. She recently had baby, out of work 6 weeks no pay. The only help she gets for pay 112.00 a month for 2 years is no interest for 2 months. They are low income and struggling but she does not want to default. She does not use card anymore.

Can she get a refund on innsurance? Wherecan she get trustworthy advice that isn’t expensive. I was hoping they could reduce balance, interest and payments

Val”

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The Answer

Dear Val,

Credit card protection insurance is notoriously filled with fine print and in my experience, rarely pays for much. It’s a huge money maker for the creditor with limited benefit, if any, for the consumer.

Without resuming her contractual payments her options are limited. She could try to go for a reduced payment plan from a credit counseling group but her monthly payment would still be about her contractual minimum, she could contact the creditor about any internal hardship programs they may offer, she could file bankruptcy to discharge the debt, or she can default on the account and when she gets back on her feet she can make arrangements then to resolve the situation.

Your daughter should not be fearful of defaulting. That can be dealt with by doing better moving forward financially and coming to a repayment agreement on this debt when she can afford it.

If you wanted to take a swing for the fence, you could contact your states insurance commissioner and ask them for advice if the credit card protection plan meets withe state guidelines. However, some card companies in recent years are no longer issuing such protection as “insurance” and thus may not be subject to state oversight.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

The Credit Card Protection Insurance is Not Paying the Bill.   Val
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Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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