Overcoming credit card hardship: how to get help

Falling behind on your bills can feel demoralizing, but choosing to do something about it can be empowering. When you take action, whether it's a hardship program, debt consolidation, or debt resolution, you’re taking your financial destiny back into your own hands. Help is available when times are hard. You just have to recognize when it’s time to reach out.

Your creditor may offer a credit card hardship program. These programs can help you catch up on payments and avoid defaulting on your debt.

What is a credit card hardship program?

Some credit card companies offer something called a hardship program to customers who are struggling to make payments due to unforeseen circumstances such as job loss or illness. Enrolling in a hardship program might help you pay off your credit card debt and avoid the long-term consequences of credit card default.

With the exception of special pandemic programs, you probably haven’t seen too many ads for hardship programs. That doesn’t mean they don’t exist. If you truly are unable to keep up with your bills, the card issuer might offer concessions like these:

• Temporarily lower your minimum payment

• Let you skip one or more payments 

• Reduce your interest rate

• Waive late fees 

• Defer the annual fee

• Reduce the amount you owe

How to qualify for a credit card hardship program

Your eligibility for a credit card hardship program depends on your income, the amount you owe, the reason for your hardship, and how long your hardship is expected to last. Each credit card company has its own requirements. 

Generally, you must be experiencing financial hardship due to serious unexpected circumstances like job loss, illness, or divorce. (If you’re a service member on active duty, you're entitled to special benefits and you don’t have to prove a financial hardship. Visit the CFPB for more information.)

Here are some steps you can take:

• Gather information: Collect documents related to your hardship, such as proof of job loss or medical bills. Review your budget to understand what you can afford for a monthly payment. The card issuer will want to know what you can offer.

• Contact your card issuer: Call your credit card company to ask about its hardship programs and how to apply. 

• Submit an application: Submit your completed application and any documentation requested by your creditor. 

• Review the terms and conditions: Carefully review the hardship program’s terms and conditions. For instance, missing a payment could affect your ability to stay in the program. You’ll want to know exactly what’s expected of you.

The earlier you contact your card issuer, the better. If you reach out to your card issuer before you miss a payment, more options may be available. 

What to expect from a credit card hardship program

A credit card hardship program doesn’t forgive your credit card debt. It’s designed to help you pay it off and avoid a default, collections, a possible lawsuit, and other financial fallout.

A hardship program can help protect your credit score. Since a hardship program makes your payments more affordable, you’re less likely to pay late. On-time payments reflect positively on your credit report and help you build good credit. It’s crucial to review your budget to make sure you can afford the monthly payments under the hardship plan.

More ways to get help with overwhelming credit card debt

Here are other options to consider if a hardship program isn’t the right fit for you.

• Debt resolution: Debt resolution involves negotiating with creditors to settle your balances for less than the total amount you owe. You can try to resolve debts on your own or hire a professional debt resolution company to help you.

• Debt management plan: A credit counseling agency can help you set up a 3-5 year payment plan to fully repay all of your debts with their guidance. 

• Chapter 7 bankruptcy: Chapter 7 allows you to walk away from some debts. To qualify, you must prove you don’t have enough income to afford a monthly payment (this is called the “means test”). You may lose some of your assets, and not all kinds of debt are forgiven. 

• Chapter 13 bankruptcy: Chapter 13 bankruptcy helps you pay off your debts over 3 years (if you are low income) or 5 years. You might not have to give up your assets.  

Tips for improving your financial situation

No matter how overwhelming your situation may seem, you can get back on firm footing, one step at a time. 

Here are some tips to help you improve your situation.

• Take a deep breath: You didn’t get into debt overnight, and it may take some time to dig yourself out. That’s ok.

• Create a budget: A budget helps you choose how to spend your money, and that’s the first step in finding more money to put toward your debts. A money management app can help. 

• Reach out: Talk to someone who has the knowledge and experience to help you create an action plan that’s right for your situation. A debt consultant can review your situation and help you understand your options. 

Theresa Stevens contributed to this article.