Options for Credit Card Debt Payments

Help is available if your credit card debt has spiraled out of control. The website Bank Rate reports that, in 2009, nearly all the major credit card companies were offering programs to help people control debt. Other options are available as well, including programs that will allow you to pay less than what you owe on your cards.

Hardship Plans

So-called hardship programs allow credit card companies to reduce your monthly payment and slash your interest rate while you get back on track. According to Bank Rate, one major card company was willing to slash minimum monthly payments by up to 40 percent in 2009. Find out if you qualify for a hardship plan by calling your card company's customer service number and explaining your financial situation.

Debt Management Plans

Debt management plans are similar to hardship plans but are far more comprehensive. Nonprofit credit counseling agencies, such as those affiliated with the Consumer Credit Counseling Services, offer debt management plans for a monthly fee of about $50. The agency takes complete control of your finances by analyzing your income and expenses and then creating a budget for you to live on. You will have input, but the goal is to create a four-year plan for eliminating or greatly reducing your credit card debt and other unsecured debt. You agree to remain in the program for the four years and to send one check to the counseling agency each month covering all your bills. The agency then pays your creditors. You're not allowed to use other credit options or apply for new credit while in the program. Contact a nonprofit credit counseling agency in your area to enroll. Get referrals for agencies from your bank or credit union, or from community organizations such as the United Way or Urban League.

Debt Settlement

Debt settlement allows you to settle delinquent debts for less than the full amount. The practice usually comes into play when accounts are nearly six months past due and on the verge of being closed, listed as charged-off and sold to debt collection companies. Credit card companies sometimes would rather settle with the card holder than sell the account to a debt collector for as little as pennies on the dollar. The "New York Times" reported in 2009 that some card companies were willing to settle for as little as 20 percent of the balance, although settlements for about half the balance are more likely. Inquire about debt settlements by contacting your credit card company after you have fallen more than three months behind. The companies typically will not entertain settlements before that.