Some Ways that Credit Card companies (And other debt collectors) will Work with you during tough economic times

The best way for you to get the Credit Card companies to work with you is to stop making payments.  Yes.  It is true.   Since the debt is unsecured, you have a good amount of time to save up some money to settle the debt for less than what you owe before your creditors try to sue you.

Normally after about 5-6 months, the Credit Card company will charge off and sell your debt to a 3rd party collection agency that will call and bother you every day to try and get some percentage of what you owe.

Here are 2 key steps you must do if you decide to go this route:

1.)    Find a good Debt Settlement company and work with them to set up a    savings plan for you to pay off your creditors for a settled amount that is far less than what you owe.  Do not try to negotiate with your creditors directly.

2.)   Get really honest with yourself about your income vs. your budget and do the following:    To stay out of debt, you must live by the 10-20-30-40 rule with your take-home income.   Here is how this works:

Save 10% of your income right off the top even if you have bills to pay.  You must do this religiously for the plan to work.  This needs to be done automatically like a payroll deduction for a 401K contribution.

Total debt excluding a house payment cannot exceed 20% of your take-home pay.  If it does, then you either need to make more money, or you need to do what you can to pay down your debt.

Your rent or mortgage payment + utilities and taxes shall not exceed 30% of your net income.

The remainder of your living expenses excluding housing shall not exceed 40% of your take-home pay.

If you don't have any debt, then you can spend more on housing or living expenses to stay within 100% of your take-home pay.

As you examine your budget and expenses vs. your take-home pay, you should be able to identify areas in your budget that are throwing it out of whack and causing you to get into more debt.   Do what you can to fix those areas and look for ways also to make more money so that you can live within the 10-20-30-40 rule.

Use the 20% of your take-home pay amount to get your debt payments under control as you work with a Debt Settlement company.  Hopefully, you will work with one that creates a monthly savings plan for you that will pay off your debt within 4 years and also fits within the 20% of your take-home pay.  I can recommend a good debt settlement company if you need me to.

If you are concerned about your credit score, then please realize that it is already trashed if you have accumulated a lot of credit card debt and now you are struggling to make the payments.   Yes.  Not making payments to the credit card companies will show up as 90 and 120 and 180 day lates on your accounts, but this will change when you settle the accounts.   Your credit score will go back up as you pay off debt and improve your debt to income ratio.  The key thing to remember is that your credit score will go down in the short term, but it will go up to be a golden score in the long term because you will pay your debt off and you will stay out of debt by following the 10-20-30-40 rule.