If you’re unable to pay your credit card bills, you aren’t helpless. You have several options, and the best course of action is usually to take action: avoiding the situation won’t help! One option is writing a credit card hardship letter.
You may be surprised to learn that credit card companies frequently work with consumers in distress. It gives the company a better opportunity to collect at least part of the debt owed. If they refuse to cooperate, they know the next step for the consumer may be filing for bankruptcy. If that happens, the company may receive no money at all.
That arrangement doesn’t exactly put you in the driver’s seat, but it does provide you with a workable strategy. Remember that the credit card company doesn’t want to send your account to collections. If they do that, they will get only pennies on the dollar. They want you to keep making payments.
Check the Credit Card Hardship Criteria
You’ll need to do some investigating on this front. Most credit card companies don’t provide credit card hardship options on their websites. The information they do provide is often vague.
For example, Capital One will allow you to adjust your payment date to one that’s a better fit with your budget. Discover provides only general guidance, but none that points to their own hardship program.
You can certainly start by checking the credit card company’s website. But you’ll need to contact the company by phone, indicate you’re having difficulty making your payments, then request payment options. They’ll likely route you to the department that can help.
When they do, be sure to take notes. You’ll need to know what circumstances qualify as a hardship and what payment options are available. That information will help you tailor your credit card hardship letter to better meet the company’s requirements. That will improve your chance of being accepted into any payment relief plan they offer.
Many hardship programs are designed to help cardholders who can’t pay because of a major life event they couldn’t predict or control. That can include the death of a loved one, a prolonged period of unemployment, a divorce, or an extended illness.
The company will likely provide specific relief options, which may include putting you on a reduced payment plan, lowering your interest rate, or waiving penalties.
Credit card hardship plans are typically handled by a specific department within the company. You’ll need to contact that department. Try to get the name of an individual you can send the letter to directly.
Sample Credit Card Hardship Letter
You can use the sample below and customize it to fit your own situation.
Daniel D. Debtor 1000 Main Street Anytown, USA 00001 (999) 888-7777 [email protected] June 1st, 2021 RE: Request for credit card hardship plan for credit card account #1234-1234-1234-1234 To Whom It May Concern: I would like to set up a hardship payment plan for my credit card account. While I have maintained a satisfactory payment history up to this point, I can no longer do so at the current payment amount. I am experiencing financial hardship and need relief so I can avoid filing for bankruptcy. My job was eliminated four months ago, and my unemployment benefit is too low to allow me to continue making payments at the current level. Since I have no immediate prospects for reemployment, I am requesting a reduction in my payment to $XXX per month. I believe that I can manage that amount, at least until I land a new job at a comparable pay level to my last position. I'm enclosing a copy of my unemployment insurance claim award for your review. Please contact me for consideration as I would like to get this plan set up as soon as possible. Sincerely, (YOUR SIGNATURE) Daniel D. Debtor
Download credit card hardship letter templates:
What You Should NOT Do
You’ll need to incorporate the information required by your credit card company in your letter. There are a few things you should avoid too:
- Never lie about your situation. The credit card company has access to your credit report and can easily find out the truth.
- Don’t commit to a payment you can’t afford to make. If you can’t afford even a reduced payment, the credit card company can terminate the arrangement.
- Don’t miss payments on your new plan. Late payments may be reported to the credit bureaus, and the company may even terminate the agreement.
- Don’t try to use your credit card. Even if you’re accepted into a hardship plan, your card privileges will almost certainly be suspended.
Finally, if you’re accepted into a hardship plan, see it through until you pay off your account is. That’s the whole purpose of being in the plan.
What to Include in Your Credit Card Hardship Letter
You should keep your credit card hardship letter brief and to the point. It should fit neatly on one page and clearly convey the most important information.
The letter should include the following:
- A request for hardship consideration.
- A compelling explanation for the factors that have caused you to be in financial distress.
- Documentation supporting that distress. This can include a copy of a divorce decree, death certificate, a medical summary, or evidence of extended unemployment.
- Your proposal for a plan (within the options the company provides) that you believe you can afford to work with.
- An explanation that you’re working through your circumstances and how acceptance into a hardship arrangement will help you avoid bankruptcy.
💡 Include a specific mention of the prospect of bankruptcy somewhere in the letter. Credit card debt is usually discharged in bankruptcy. If that happens, the company gets nothing.
The Bottom Line
Inability to make your credit card payments puts you in a compromised position. That doesn’t mean there are no options. If you get behind on your credit card payments or feel that you will soon, be proactive and contact the company immediately. Taking the initiative is seen as a sign of good faith, and there’s a good chance that the company will work with you to find a solution.
Do you have any questions about writing a credit card hardship letter? Let us know in the comments!