If you are experiencing a hardship such as unemployment, serious illness, the birth of a child, death of a loved one or excessive credit card or medical debt, it can create havoc with your finances. Many creditors will work with you and make some adjustments or amendments to your credit accounts.
Significance
You can contact your credit card companies and let them know you are experiencing a hardship and they may be able to get the interest reduced on your credit cards as well as a reduction in your monthly payments.
Considerations
A mortgage company may process a modification for your loan. A modification will reduce the interest and lower your monthly payment.
Features
Sometimes a mortgage company will defer a portion of the principal balance to the end of the mortgage term if you are facing a hardship. This amount gets paid back at the end of the mortgage term.
Effects
You can also contact an organization within your area that offers a consumer credit counseling program. Many of these programs do not charge you a fee. There is an opportunity to get your payments and interest reduced.
Warning
A hardship situation can also force you into bankruptcy if you cannot recover. The majority of your debts which don't have any collateral or security attached will be discharged in bankruptcy court. You do not have to repay discharged debts. Bankruptcy is always your last resort if you cannot be helped with any action plans.
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