If you’re having trouble making ends meet, don’t avoid your debt to the point where you end up behind on payments. Asking for help is hard, but it can save you money in the long run and a lot of stress and heartache.
First, if you’re struggling to pay your minimum debt payments on time, call your lender and ask if there’s a hardship department or hardship program you can speak with. If you have an obvious circumstance like unemployment, an illness or hospital stay, natural disaster, or a family crisis, your lender may be able to put you on special terms for a few months to help you get back on your feet. You may have to provide documentation proving your hardship, and your lender may require that you agree to special terms, like a reduced or paused interest rate, in writing.
Participating in such a program could cause your credit score to go down since your credit utilization will go up if you’re paying less or not paying at all for several months. But it’s better to have your score decrease for this reason than to end up with a credit history loaded with negative marks due to late payments and fees.
If your struggle is more than temporary, you might consider debt counseling. Don’t trust advertisements that claim to offer quick and easy debt relief. Instead, search for accredited counselors through the National Foundation for Credit Counseling or the Financial Counseling Association of America. Debt counselors can provide education and guidance to determine the best path to eliminate your debt over time. In some cases, you may be a good candidate for a debt management program. In these programs, your debt isn’t reduced, but your program may be able to negotiate a lower interest rate for you. Your debt counselor will manage all your debt payments and you’ll make one payment each month toward your debt. Some programs charge a monthly fee of about $30 to participate. There’s no cost to chat with a debt counselor or access resources that can help you get organized, so don’t hesitate to reach out to a respected organization if you’re in need of support.