Credit card debt can be overwhelming, unless you know one little trick: nearly 8 out of 10 credit card holders that ask their credit card companies for a lower interest rate are actually granted their request.
A Credit Card Debt Trick
When you’re facing high amounts of credit card debt, it can feel as if there is no way out. But truth be told, many credit card companies are willing to work with debtors that are having trouble meeting their monthly payments.
According to a recent survey done by CreditCards.com, your chances of lowering your card’s APR by asking for a reduction is 79 percent. And when it comes to waiving a late fee, that chances are about 90 percent!
So when the odds are so good, why aren’t people taking advantage of it? As was noted by the same survey, only 1 in 5 American credit cardholders has ever asked these questions of their credit card companies. But why?
A lot of it is fear. Most creditors don’t believe that help is available for them. But as this study shows, the chances are better than they think! Additionally, it can feel intimidating to pick up the phone and negotiate a lower APR. The truth is, the process can be as easy as just asking. Many credit card companies actually have policies that allow them to waive late payment fees if they are asked. Additionally, there are some tips you can use for negotiating lower interest rates:
- Use the phone. Sure, email and live chats have made communicating with credit card companies easier over the years, but if you are wanting to negotiate a lower interest rate, you’ll have better chances by picking up the phone.
- Be persistent an polite. Remember that the customer service reps on the phone are just doing their jobs. So while you’ll want to be direct and clear in what you’re asking for, if the customer service rep doesn’t grant your request, don’t be rude, but be persistent and request to speak to his or her manager.
- Use other offers. Chances are you’ve received several offers from credit card companies lately. These offers can be leveraged to help you get a lower interest rate on your current card. For example, “I’ve been a customer with your company for several years, but my APR is at 20 percent. I’ve been receiving offers in the mail from other companies for cards with a 15 percent APR. Would you be able to match that rate?”
- Aim for a 3 to 5 percent reduction. You cannot expect to go from a 20 percent rate to a 12 percent rate with one phone call, so aim for a 3 to 5 percent reduction. This can make a significant difference if your balance is high.
The truth is, consumers have a more bargaining power than they think they do. So be willing to use it to help save yourself from overwhelming debt.
If your debt has gotten to be too much though, you might want to consider other forms of dealing with it, including bankruptcy.
When is Bankruptcy a Good Thing?
You’ve always been told that bankruptcy is a bad thing, and that it can take years to recover. But a lot of times, bankruptcy can be just what you need for financial. Here are some instances when filing for bankruptcy protection might make the most sense, and actually regain your financial standing.
Liabilities Are More Than Assets
“We look at bankruptcy as a last resort,” said Leslie Tayne, a debt-relief attorney. “But sometimes I do advise people to file for bankruptcy. When paying off debt would leave you with no money left over to put food on the table, if it means you can’t pay your mortgage, if there is nothing left over, that’s catastrophic, and then it makes sense to file for bankruptcy.”
Tayne advises on filing bankruptcy when consumers owe so much that their liabilities are far higher than the value of their assets. Why? Because in these cases, it can be impossible for a consumer to actually catch up to their debt.
“If income is far less than expenses, if there is no end in sight even if I help them cut their expenses, then bankruptcy might be the only option,” says Tayne. “If their income will never let them meet the requirements to pay even the minimal amount of what they owe each month? Then bankruptcy might be their only choice.”
Negotiations Don’t Work
It’s always advised that before you decided to file for bankruptcy, that you try to work things our with your creditors. Creditors are often inclined to help out consumers as long as consumers are active in doing so. Many creditors are able to reduce the amount of money owed if you are able to prove you are struggling financially. You might need to provide copies of your most recent paycheck stubs and bank statements, or anything that will prove that your income has fallen or that your savings are depleted to your creditors before they are able to offer assistance.
This is the first step you should take in trying to deal with debt.
But if your creditors are not willing to negotiate, the only option you may have is to file for bankruptcy protection. After you file, your bankruptcy trustee will be responsible for negotiating with the people you owe. A lot of times, these professional negotiators are more able to convince creditors to forgive at least some of your debt.
A Job Loss or Serious Illness
Job loss or serious illness can be devastating – and not just emotionally, but also financially.
Bills and debt tend to pile up quickly during these times, which can make it impossible to generate the monthly income you were once used to.
If job loss, medical emergency, or other financial disaster has made it impossible for you to come up with a monthly income, and there is no way that you will be able to recover in a quick amount of time, then bankruptcy can provide the relief you might need to help you recover from these financial setbacks.
Working with a Bankruptcy Attorney
When you decide to file bankruptcy, you should also consider working with an attorney. They will advise you on the following:
- the type of bankruptcy you should file
- how bankruptcy can help you
- what to expect during the process, and
- any potential difficulties they see with your case
Additionally, you should be able to address any questions or concerns you might have.
The Bankruptcy Process
Filing for bankruptcy requires you to fill out a packet of forms. Your bankruptcy attorney will have specialized software that helps to guide you through the process and also ensures that everything is prepared for the court. You will be required to provide information about your income, expenses, assets, and debts. Working with an attorney will ensure that the information on these forms is filled out accurately, and filed correctly.
You will need to attend a meeting of creditors after you file for bankruptcy. Depending on your specific filing, you might need to attend additional hearings. Your lawyer will advise you on if you need to be in attendance, or if they are able to represent you without you needing to be there, as sometimes you will not be required to be in attendance.
At all times your lawyer will help you to understand the process, as well as ensure that the court has all the information it needs to obtain from you, in addition to any forms.
Working with a Bankruptcy Attorney
Bankruptcy law can be hard to understand. Because of this, it’s highly advised that you work with a bankruptcy attorney that can walk you through the process and clarify any questions or concerns you might have. There can be a lot of questions during this extremely stressful time. Let the lawyers at Resnik Hayes Moradi LLP walk you through the process so you can achieve the best outcome possible.