How to Eliminate Interest on Your Debt

If you are saddled with burdensome credit card debt, you have several options for relief. Spiraling debt is a major concern in the United States, and businesses and non-profit agencies abound, offering credit card holders a variety of pay-off plans. Totally eliminating interest is very difficult to achieve, especially if you want to keep intact what remains of your good credit. However, there are some temporary interest elimination strategies.

Instructions

1

Pull a copy of your credit report. You must take a candid look at your entire debt picture. Go to Annual Credit Report in Resource 1 to learn how you can obtain a free copy. Add up all bills and monthly payments. Keep these figures handy.

2

Calculate your debt-to-income ratio (DIR). To do this, add together all monthly payments on bills that are routinuely reported to the credit bureau. Divide this number by your total gross monthly income. A DIR over 50 percent indicates an economic hardship. If your DIR is below 50 percent, you will have trouble eliminating interest. Creditors will want you to pay as agreed since you show an ability to do just that.

3

Find any documents relating to your economic hardship. For example, if you are permanently disabled, you should have a disability award letter from the Social Security Administration. Or, if you were laid off, you might have unemployment check stubs. Collect all of these documents.

4

Contact all lenders and ask for a hardship program application. The guidelines on these programs can differ as all lenders have proprietary rules governing the extension of hardship plans. You will need your income documents to corroborate your economic hardship.

5

Write a letter explaining your difficulties. Most lenders want to read a first-person narrative discussing the nature of the default. Most hardship applications are reviewed on a case-by-case basis. Send this letter with your application, supporting documents (see Step 3), and income documents.

6

Wait for a response from your lender. Since hardships are often emergencies, you will likely receive a decision within a week. If denied, appeal to the management of the loan company.

7

Get the hardship loan arrangement in writing, if approved. Most hardship agreements will completely eliminate interest charges for a temporary period of time. They are designed to help you catch up and get back on track.