Credit Card Debt Negotiation: Possible Outcomes for Utah Clients

In part one of this two-part blog series, we went over some basic tips on how to negotiate debt with your credit card company. This is one method some people may take if their credit debt is piling up, allowing both sides to work together toward a realistic solution.

At 1st Choice Money Center, we’re proud to offer a variety of loans for clients struggling with debt, including Utah signature loans, title loans, and several other quality alternatives to predatory payday loans. We’ll also offer you basic expertise and insight on managing your debt, including on negotiation with credit card companies. Here are some additional tips and options to consider in this realm.

credit card debt negotiation outcomes

Workout Agreement

During a workout agreement, your credit card company agrees to reduce your interest rate, waive or lower your payment, and/or eliminate late penalties as part of a new, approved plan. They may extend your due date, allowing you to make payments more frequently. This can be most helpful if you cannot afford the minimum due on your card each month, or if you’ve had a period of unemployment and are now struggling with payments (rates will vary).

Only use this option as a last resort; not everyone qualifies for these terms.

Hardship Agreement

For people who cannot make credit card payments due to illness, job loss, natural disasters or other forms of hardship, a hardship agreement may be a possible solution. This allows you to suspend your payments for a specific period of time, with the interest and fees still accruing on the balance. There are a few different ways this may be done, including the credit company lowering minimum payments for some period or extending the due date. A hardship may be granted for anywhere from 6 months to 12 months, in most cases.

In this case, you must send a letter explaining your situation to the company and include documentation of your illness or loss (e.g., doctor statement) notifying them of an expected recovery period. After your suspension ends, your interest rate will be in effect, but your credit card payments may be lowered or modified.

Budgeting and Documentation

After you’ve completed an agreement with your creditor, you should start budgeting to reduce future debt. This can be done through creating month-to-month spending plans which include an itemized list of all recurring costs (utility bills, rent/mortgage, groceries, etc.). If you have a partner or spouse who is living with you, this step will be important for them to help keep track of expenses.

In addition to budgeting methods, documentation should also be gathered from all parties involved regarding the agreement terms. The credit card company may require copies of your statements or paycheck stubs to ensure you are fulfilling the terms of your new contract.

For more on negotiations with a credit card company, or to learn about any of our installment loans or other short-term loan options in Utah, speak to the staff at 1st Choice Money Center today.