During this period of economic and financial constraints, over due credit cards, mortgage payments and bank loans seem to be running rampant.  Getting behind in your credit card payments seems to be the first thing that typically happens.  For whatever reason, when it does get too hard for consumers to pay off their cards, Visa, MasterCard, American Express all seem to have special hardship programs to accommodate people who are experiencing some degree of economic adversity.

It doesn’t really matter what the circumstances are, however, as credit card companies will always do their darnedest to recoup their money from you.  No matter the hardship, no matter the situation you should be experiencing, the lending company is just that, a lender, with whom you have an agreement to pay.  The purpose of any hardship program sponsored by card issuers is to keep the account in good standing and to keep you paying on their terms.

In line with the terms of any hardship program and its agreement, they may reduce your annual percentage rate (APR), and may even agree to reduce your monthly minimum payment.  Rest assured, however, they still want their money back from you.

Who Is Eligible for A Hardship Program?

Hardship programs are not just handed out haphazardly to people who have recklessly exceeded their means.  It is a program orchestrated for special situations like a job loss, death, or other unexpected situation that arises involving unexpected expenses or unexpected loss of income. If you have simply over run your spending and ‘maxed out’ your card, don’t expect the lender to bail you out.

Consider discussing the terms of payment, interest rate and minimum monthly payments with your lender.  Hardship programs are meant to help restructure your payment obligations to prevent card holders from defaulting.   It’s quite surprising how card issuers will accommodate some unfortunate situations.  If, for example, you are heading towards bankruptcy, your card company may reduce your monthly minimum payments.   This is because if you do go bankrupt, chances are the credit card company won’t get paid at all.

When card holders get behind by more than 90 days some credit companies will offer reduced payment and interest programs to assist card holders in getting back on track and making good on their debt obligation.  Others, however, may not be as congenial.

If you continue to make payments on the balance then the card company sees it as a profitable venture and probably won’t reduce the minimum payments or interest rate.

What About Your Credit Score?

Credit scores will be affected by your enrollment in a hardship program.  Although institutions appreciate and recognize that you are trying and willing to pay off your account, enrolling in a hardship program will result in lenders seeing you as a ‘bad risk’.   This may result in difficulties further along if you plan to apply for a new credit card or get a loan or mortgage.  To keep a good credit score you have to pay your bills on time.  Late or outstanding payments will lower your score and outstanding collections will stay on your record for seven years.

Entering into a hardship program will render your card useless.  As part of the deal with a hardship program the card company closes your credit account to prevent the possibility of further losses.  Credit card companies don’t usually advertise hardship programs, so if you need one, it will require some investigation on your part.  It will be doubtful that you can negotiate your interest rates from 20% to 2%, but some companies will lower monthly payments and reduce the interest to accommodate payments.

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