NEW YORK (CNNMoney.com) — Rising unemployment is pushing strapped U.S. borrowers over the edge, with delinquencies and balances on delinquent credit cards surging — that’s according to an industry report. Here’s your step-by-step guide on what to do if you can’t afford your credit card payments.
1. Contact your lender
Let’s say you’ve lost your job, or are looking at a steep medical bill, and worried you won’t be able to make your credit card payment.
Make sure you call your lender and explain the situation. The sooner you contact them, the more willing they may be to work with you.
More and more credit card companies are willing to negotiate. Realize that they’re not being charitable — they’re just trying to get what they can out of you.
So, what can you ask for? If you can make some sort of monthly payment, ask your issuer to lower your rate and possibly waive your fees. Also ask to work out a payment plan.
If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you.
Document all conversations, including the name and title of the person you spoke with, date, time and results.
Go to helpwithmycredit.org — a Web site operated by credit card companies for more information on dealing with debt issues.
2. Get your debt forgiven
Increasingly, credit card issuers are accepting dimes, if not pennies, on the dollar as payment in full. But if you’re striving to get a debt forgiven, don’t expect a sweetheart deal.
Generally you have to meet certain criteria. For example, most cardholders have to be delinquent for at least 90 days and — usually — your credit report needs to show that missing payments isn’t a common occurrence. But that doesn’t mean that once your debt is settled, there are no consequences.
Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must pay income taxes on that amount.
If you’re looking for guidance on negotiating with your credit card company, go to the National Foundation for Credit Counselors at NFCC.org.
Don’t waste your time with third party debt settlement companies. These companies charge you fees for a service you can do yourself — for free.
3. Prioritize your payments
If you’re having trouble making your monthly bills, it’s time to prioritize.
First, look at your immediate needs. Pay your mortgage or rent bill, keep making payments to your utility company and keep food on your table.
Then start to think about paying down your credit card balances. Find out which card has the highest interest rate and pay that one off quickly while making modest payments to your other credit cards.
Remember that credit card debt is unsecured debt — meaning that there’s not much that the credit card company can take away from you if you’re delinquent. You should always strive to pay off your debts. And stop using your credit cards until you pay off your current balances.
– CNN’s Jen Haley contributed to this article.
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Struggling with credit card debt?
I have learned many lessons as a result of reading Robert Kiyosakis books.
These are just a few I would like to share with you. But bare in mind, these principles may throw everything you may have learned out the door.
Lesson #1: Your house is a liability, not an asset.
Lesson #2: Leverage is the reason some people are rich and others do not become rich. And most people do not become rich because they fear the power of leverage. And the most powerful leverage in the world is your MIND.
The poor and middle class have a hard time getting rich because they try to use their own money to get rich. If you want to get rich you have to learn to use others money…not your own.
Lesson #3: Good debt makes you rich, bad debt makes you poor.
Lesson #4: The choice of words you use will make you rich or poor. Words are powerful tools…tools for the brain. It does not take money to make money. “Getting rich begins with your words and words are free.â€
Poor people say ‘I can’t afford it’ more often than rich people. Your words become flesh.â€Poor people use poor words create poor peopleâ€.
Lesson #5: The problem with having a job is that it gets in the way of getting rich.
Lesson #6: The biggest challenge you have is to challenge your own self-doubt and your laziness. If you want to change what you are you must take on your self doubt and your laziness. It is your self doubt and laziness that deny you the life you want,â€. If you will take on your self-doubt and your laziness, you will find the door to your freedom.â€
Lesson #7: It is your “Why†that gives you the power to do the how to. Instead of looking inside of themselves to find a ‘why’ they want to become rich, most people look for the easy road to wealth, and the problem with the easy road is that the easy road usually ends in a dead end.
Lesson #8: Unless someone has a passion for something, it is difficult to accomplish anything. Rich Dad used to say. “If you want something, be passionate. Passion gives energy to your life. Passion gives energy to your life.
Lesson #9: Take at least 1 hour each month to reflect on your life. Taking the time to reflect on Robert Kiyosaki life raised the following ideas.
1. What he thought was important was not that important.
2. What was important was where he was at, not where he was going.
3. There is no one more important than the person in front of you at that moment. Take that moment to be with him or her.
4. Time is precious., dont waste it…appreciate it.
5. Sometimes stopping for a moment is harder than staying busy.
Lesson #10: A high paying job without ‘Financial Education’ often means the person gets deeper in debt faster than someone with a low -paying job. That is not too intelligent.
More:
10 “Retire Young, Retire RICH†Lessons
