“Dear Steve,
My husband almost died due to an abscess on his liver. Medical bills piled up. Then he lost his job. Then I lost my job due to budget cuts. Currently my husband is unemployed, and I am working, but for less than my last job. Credit cards were used for everyday items such as food. Had been paying them off monthly at more than minimum. Then, credit card companies raised APR percentage and minimum payments to even more than had been paying them off at more than minimum. Could no longer afford monthly minimum. The credit card has spiraled out of control due to finance charges of $400 a month.
How do I get the credit card company to lower payment to what I want. I can afford $400 a month to pay them off. That is it. There is no more in the budget than that, and that is even with cutting down on food, electricity, etc. I am more than willing to close the account. I have been talking to them for 3 months now to no avail. I want to get rid of this debt!!!!!
Sally”
Dear Sally,
Actually, while you think it makes good common sense for you to enter into a repayment plan that you can afford, sadly the creditors don’t really care. Creditors look at acceptable repayments as what they want, and not necessarily what you can give.
If you’ve already been communicating with them and they have not proposed anything substantial that will work for you then you have three options.
- Credit counseling or debt management programs may reduce your payment if you are currently behind. Click here for debt management information. Your payment will be calculated by the creditor formulas that the creditors dictate to the credit counseling groups and not what your budget allows. Talking to a debt management company is a good first step to take to see if it is a solution that will work for you.
- Bankruptcy is a legal and logical option if you just can’t get by each month anymore. Sure bankruptcy is painful but so is just making it from month to month without getting ahead at all. Talk to a bankruptcy lawyer and find out what your options are in bankruptcy.
- Keep paying the minimum payments or pay the cards off in full. Sure, this approach just leaves you on a treadmill and does not change anything but it is an option if you are not ready to take more drastic action like a debt management program or bankruptcy.
As it stands now, you are perfectly situated to make the creditors a maximum amount of money from jacked up interest and fees. They’d rather see you do that than let you jump down to a payment to better fits your budget. One thought is that they try to extract their pound of flesh, and as much as possible, before you stop paying or go bankrupt so they are going to push you as much as possible before you eventually default.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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Cleaning up credit is not just as easy as many people whoi blog on these sites say.
Call your credit card company and tell them you cannot give them any more money and that they must lower your interest rate. Threaten bankruptcy. Make it clear that they will not get your money unless they work with you. Sometimes, they’ll listen so they can continue to take at least some of your hard earned money. Make it a regular practice to call your credit cards to ask for a lower rate. I have one client who owes over $20,000 on a Visa that was at 18%. He spoke with a ‘rate specialist’, touting his rising credit score and declining balance and got his rate cut in half, from 18% to 9%! His monthly interest charge was instantly reduced by $150, which will help him pay off his debt even sooner.