The current economic crisis may have a silver lining for those hardest hit. Credit card companies, which normally charge numerous types of fees and penalties to delinquent consumers, are actually responding to their customers' needs by working with people in exceptionally difficult circumstances to modify their credit card debt repayment schedules to something they can handle. The relief they're offering is forbearance, which is not to be confused with debt forgiveness.
When is Credit Card Forbearance Necessary?
Let's imagine a scenario. Jim pays a mortgage, raises two kids, works extremely hard, has $9,000 in credit card debt - and just lost his job when management decided to layoff a third of the company. Jim's not happy, and he gets particularly frustrated when he thinks about how he's going to pay his bills. What Jim will be happy to hear is that his credit card company could very well be open to discussing forbearance with him, and cutting him some slack while he deals with the fallout from his layoff. Again, forbearance is not debt forgiveness - that's usually the province of personal bankruptcy. Credit card forbearance, rather, could be a substantial lowering of a credit card rate, or the suspension of payments for six months. Fees could be eliminated. The point is, Jim's credit card company is willing to work with him to make his life a little easier and a lot less stressful. Forbearance could make what feels like all the difference in the world to someone in Jim's position.
Consumers Need to Be Proactive in Seeking Help
Critical to effective forbearance negotiations are a consumer's proactive steps. To return to the example of recently laid-off Jim, assuming he was current on all of his credit card payments, he should have called the credit card company as soon as possible after he'd been let go in order to capitalize on his good payment record. He would be dealing with a stronger hand in his forbearance discussions with the credit card company, and even more so because he called before the payment problem had even arisen. Letting someone know there's a potential problem on the horizon is a smart move, as opposed to letting things go too long before seeking help.
The American people are rightly angry about the banks, credit card companies and Wall Street these days, and it's a good guess that everyone will be helping to get consumers out of the mess by helping to ease the weight of payments in the wake of rising unemployment. Take advantage where you can, but be sure to seek help before you ever miss your first payment. Of course, having credit cards with good rates can be useful, but you have to manage your credit wisely.
Do you have a large amount of credit card debt, and are afraid of falling behind? Have you tried contacting creditors to help with your situation?
