Questions You Can Ask Your Issuer
While creditcard issuers are offering to help cardholders during this time, its not alwaysclear what they may be willing to offer people whove been affected by COVID-19.To help, weve put together a list of questions you can ask your issuer whenyou explore your options.
Itspossible that some of these questions may not be relevant to your situation andtheres no guarantee youll get what you want. But we hope theyll help youstart the conversation with your issuer.
How A Dmp Works
In a DMP, you deposit money each month with the credit counseling organization. It uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees. But its a good idea to check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments it could take 48 months or more to complete your DMP. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for or use any additional credit while youre participating in the plan.
National Debt Relief: Best Company Overall
National Debt Relief is our top pick for the best debt relief service of 2021. National Debt Relief was founded in New York in 2009. Since then, it has become one of the largest and most respected debt settlement companies in the nation with accreditations from the American Fair Credit Council and the International Association of Professional Debt Arbitrators as well as an impressive A+ BBB rating.
In line with its mission of helping clients reduce their unsecured debt, National Debt Relief has a track record for settling many clients debts for just 30% of their total debt. The company is also known for its overall transparency, outstanding customer service, and money-back guarantee.
National Debt Relief provides a wide array of debt settlement services, including business debt, credit cards, lines of credit, medical bills, personal loans, and student debt. However, the company does not handle mortgage loans and back taxes.
Enrolling in one of the National Debt Relief programs is easy you can sign up over the phone. Next, youll receive a free consultation with one of the companys debt counselors. After discussing your situation and determining a solution, youll set aside a specific amount of money in a dedicated account each month. You will use this money to settle your debt for less than what you owe.
In the meantime, the company will help coordinate your efforts and negotiate with creditors on your behalf.
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Financial Help For Women And Families
- Child Tax Credit A direct benefit of the U.S. governments stimulus program for COVID-19 debt relief. The American Rescue Plan signed into law in March 2021 increased this tax credit from $2,000 to $3,600 for children under six and to $3,000 for children up to 18 years old for families making less than $150,000 per year.
- Single Mother Guide Lists many resources for single mothers as well as statistics on single parenting.
- NWLC The National Womens Law Center monitors laws and policies favoring women and families, and has a Poverty and Income Support section that contains articles and reports about available family support programs, family tax credits and more.
Other Debt Relief Options
Working with a debt settlement company is just one option for dealing with your debt. You also could: negotiate directly with your credit card company, work with a credit counselor, or consider bankruptcy.
Talk with your credit card company, even if you have been turned down before. Rather than pay a company to talk to your creditor on your behalf, remember that you can do it yourself for free. You can find the telephone number on your card or your statement. Be persistent and polite. Keep good records of your debts, so that when you do reach the credit card company, you can explain your situation. Your goal is to work out a modified payment plan that reduces your payments to a level you can manage.
If you don’t pay on your debt for 180 days, your creditor will write your debt off as a loss your credit score will take a big hit, and you still will owe the debt. Creditors often are willing to negotiate with you even after they write your debt off as a loss.
Contact a credit counselor. Reputable can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
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Relief Through Debt Settlement
Debt settlement is a financial game of chicken. We do not recommend debt settlement for the vast majority of people. Bankruptcy is almost always a better option debt settlement is a last resort for those who face overwhelming debt but cannot qualify for bankruptcy.
Debt settlement companies typically ask you to stop paying your creditors and instead put the money in an account they control. Each creditor is approached as the money accumulates in your account and you fall further and further behind on payments. Fear of getting nothing at all may motivate the creditor to accept a smaller lump-sum offer and agree not to pursue you for the rest.
Not paying your bills can result in collections calls, penalty fees and, potentially, legal action against you. Debt settlement stops none of that while you’re still negotiating. Expect at least four to six months before the settlement offers begin. Depending on how much you owe, the process could take years.
And the continued late payments further damage your credit score.
You may also face a bill for taxes on the forgiven amounts . Lawsuits can lead to wage garnishments and property liens.
You can attempt to settle a debt yourself, or you can hire a professional. The debt settlement business is riddled with bad actors, though the Consumer Financial Protection Bureau, the National Consumer Law Center and the Federal Trade Commission caution consumers in the strongest possible terms.
Make A Plan To Pay Back Your Family Or Friends
If you have a personal loan with family or friends, talk to them about the money you owe. Commit to a payment schedule that works for you and the person who lent you money.
You may want to consider writing post-dated cheques or setting up automatic money transfers in order to stick to the payment plan. This will also show that you’re committed to repaying them.
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How To Pay Off Debt With Low Income
At the low-income level, theres obviously not a lot of wiggle room for disposable income. But with some resourcefulness, hard work and imagination, families can maximize their money by setting and tracking financial goals.
Heres the money quote that should motivate you.
Paying off debt is rarely about how much money you make. Its about managing the money you have.
There are many high-income earners who also live paycheck-to-paycheck because theyre frivolous with their money. The most financially successful families manage the money they have and budget accordingly.
For low-income families, here are some tips that will help you manage. The first step is to make a plan. What goal are you trying to achieve? What resources can you tap? What percentage of your budget do you allot for housing? For food? Utilities? Transportation?
If you dont feel experienced enough to create an affordable budget, get a free consultation with a nonprofit credit counseling agency like InCharge Debt Solutions. The counselors are professionals who offer assistance to low-income families trying to escape debt.
Here are other suggestions that should be considered resources for low-income families to regain financial control:
Tips For How To Get Rid Of Credit Card Debt
Here are additional tips that can assist you with getting rid of your credit card debt. All of these are things that borrowers can do themselves. They are in addition to the assistance programs above.
1. Never charge what you can’t afford in order to reduce your need for credit card debt assistanceYou need to avoid creating a credit card debt or payment that you can’t manage .Live within your means and income. It is very important that you do not use your credit cards irresponsibly and that you don’t buy things that you couldn’t otherwise afford to buy if you had used cash.
This tends to be the most difficult thing for many people as we are a nation of consumers, but unfortunately there is no simple solution to this. It is just a matter of discipline and willpower.
2. Do not carry your credit cards all the timeIf every time you leave your house you carry your credit card, it is too easy to pull it out when you see something you would like to buy and charge it. In other words, if you do not have the card with you, it means you’ll have to go home and then return to the store, which gives you a chance to reconsider the purchase in the first place. Or it means you will use cash, which may make you think twice before buying something. Eliminate credit card debt by not creating it in the first place!
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What To Consider Before You Sign Up For A Debt Management Plan
Think about the following before you enroll in a debt management plan.
Will it save you money
A lower interest rate will save you money. But the credit counselling agency may charge you a fee for its services.
Compare the credit counselling agencys fees with what you’d save in interest on the debt management plan. If the agencys fees are more than what you’d save, you may be better off seeking help from other sources.
Be aware that some credit counselling agencies may promote a debt management plan over other options, because they make money from creditors by getting a percentage of the debt that they recover.
You may consider other options, such as a consumer proposal or even bankruptcy. A licensed insolvency trustee can typically offer you free advice on these two options. Credit counsellors are unable to offer consumer proposals or manage bankruptcies.
- car loans
Debt management plans usually don’t cover secured debts because the company you owe money to could take your asset if you don’t make payments.
Make sure that the credit counsellor explains exactly which of your debts the program will cover.
What will happen to your credit report
Entering a debt management plan will have a negative impact on your credit report. Your credit score will decrease. There will be a note on your credit report that you’re making regular payments on your debts through a special arrangement with a credit counsellor.
An Example To Bring Cirpa To Life
To bring the CIRPA proposal to life, assume Karen has a $6,000 balance on her credit card with a 25 percent nominal interest rate . When her statement comes, she would normally owe $125 in interest.
Under CIRPA, the nominal interest rate would be capped based on negotiations between the government and banks. Normally, credit cards are considered unsecured loans because there is no collateral if a consumer defaults . Unsecured loans, therefore, tend to have high interest rates credit card interest rates range from 9 to 29 percent. However, given that with CIRPA the majority of the interest charge is backed by the government, the risk borne by the credit card companies is substantially lower and a lower interest rate would be justifiable.
Lets assume that the negotiated interest rate cap is 12 percent under CIRPA. In this case, the interest charge on Karens credit card would be $60. The government would pay 70 percent, or $42. Karen would be responsible for the remaining 30 percent, or $18, which she could defer. Ordinarily, credit cards have a minimum payment of at least 1 percent of the balance, but CIRPA would allow Karen to defer this $60 minimum payment too.
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Both Karen and the bank benefit from this arrangement. Karen has reduced interest obligations and can preserve cash flow without immediate bills while the bank reduces the likelihood of default and is receiving regular payments from the government in excess of minimum amounts due.
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Can I Skip Or Defer A Payment
If youd benefit from skipping your payment for a month or longer, it doesnt hurt to ask your credit card issuer if its possible to do so. Some credit card issuers have indicated theyll consider requests to defer payments.
But we recommend you clarify not only if you can pay later, but whether your issuer will also waive the interest charges that you could rack up during this time.
But if yourcard issuer doesnt approve this request, you could ask if itd be willing towaive the interest charges as long as you make the minimum payment.
Loans And Credit Card Relief For Covid
One thing isnt changing right away. Renters who can demonstrate theyve been economically hurt by coronavirus still cant be forced out of their homes.
Citing studies that indicate evictions lead to crowded living conditions, spreading COVID-19 and virus-linked deaths, the Centers for Disease Control extended its ban on evictions until October 3rd welcome relief to the eight million households the Census Bureau says are behind on their rent.
The COVID-19 pandemic has presented a historic threat to the nations public health, CDC Director Dr. Rochelle Walensky said. Keeping people in their homes and out of crowded or congregate settings like homeless shelters by preventing evictions is a key step in helping to stop the spread of COVID-19.
Theres welcome news for the 10 million-plus homeowners behind in their mortgage payments: Homeowners behind on their mortgage payments were granted relief through June 30 when the White House directed the Department of Housing and Urban Development, Department of Veterans Affairs, and Department of Agriculture to expand and extend forbearance and foreclosure relief programs for those with federally backed mortgages.
Additionally, Fannie Mae and Freddie Mac extended foreclosure moratoriums for an additional three months for borrowers approaching the end of their forbearance period.
An estimated 20% of homeowners missed at least one mortgage payment in 2020 and nearly half missed at least three payments since March 2020.
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How Can Seniors Get Help With Paying Down Debt
If you are struggling with debt, the first step is to talk with a regulated debt professional like a Licensed Insolvency Trustee. Your trustee will review several possible debt solutions with you, including:
Doing nothing. If you have no assets and your only income is pension income which cannot be garnished, you can tell most creditors I cant pay and do nothing. As mentioned, there are a few exceptions like CRA, but if you can deal with the calls, this can be a good choice if your income is limited.
Work out a payment plan with a credit counsellor. Non-profit credit counsellors can help you arrange a plan to repay everything you owe over a period of up to five years. They might even be able to stop interest charges. If you are on a reduced income and you owe simple debts like credit card debt with small balances, consider talking with a credit counsellor.
Consider government debt relief programs that can help seniors. The final solution may be to consider talking with a Licensed Insolvency Trustee about government debt relief programs for seniors.
If you own a home and have some equity, but not enough to refinance, you could make a proposal to your creditors through a government debt relief program called a consumer proposal.
A consumer proposal is also an option for those who have a higher pension income or additional income from employment or outside assets.
Be careful not to drain your RRSP for debt repayment
Get a free consultation
Debt Free in 30
Ask Questions About The Credit Card Relief Packages They Offer
While your credit card company may offer up one or more options, have a list of questions prepared in advance. You want to make sure youre completely comfortable with the terms before you agree to these options.
Here are key questions to ask:
Note: that the recently passed Coronavirus Aid, Relief, and Economic Security Act places special requirements on companies that report your payment information to credit reporting agencies if they provide payment relief due to the coronavirus pandemic.
- Will I lose the ability to charge anything to my card if I enroll or request relief?
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Government Assistance For Paying Off Credit Card Debt
By | Submitted On January 28, 2010
Do you know that Americans are in debt billions of dollars to credit card companies? Are you aware of the fact that millions of Americans are burdened with ballooning credit card debts? Recent observers state that the past couple of years have witnessed the highest rates of accumulation of delinquent credit debts. Ahead of the present financial stagnation, a high percentage of Americans’ budgets were hit hard, throwing thousands into a vicious circle of accumulating debts. Government assistance in paying off credit debt is a life jacket to many citizens who are drowning in debt.
Obama has decided to offer many solutions to debtors who aren’t capable of repaying their credit debts. The new president is pumping more federal funds into pre-existing non-profit federal agencies which offer debtors indispensable resources and advice about credit debt settlement, modification and consolidation. Some of those agencies can even offer free credit loan counseling. The Association of Independent Consumer Credit Counseling Agencies is a perfect non-profit organization that offers debtors convenient solutions free of charge. The AICCCAA helps credit card debtors choose the right way out of their problems.
If you are repeatedly failing to pay your credit card bills, you are in a real problem and should choose one of the following solutions:
I did a little research for you. Start getting out of debt, possibly as early as this week.