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If you're like most consumers, you may not be aware of the possibility of modifying your credit card agreement. If you have a good payment history with your credit card company and you suspect that you might fall behind on your payments, a credit card agreement modification could help you preserve your good credit rating.

Request a credit card modification. The common belief is that your credit card account must be at least 90 days delinquent before your creditor considers an agreement modification. That is not always the case. Some credit card companies are beginning to realize that by working with their customers at the early stages of account delinquency, they might recover more of the debt, according to Need Help Paying Examples of such companies are Bank of America and JP Morgan/Chase. Therefore, if you're suddenly laid off or your financial status unexpectedly changes, contact your creditor and ask to speak with a credit card modification agent.

You must satisfy certain requirements. Expect the modification agent to review your payment behavior. For instance, a missed payment is generally not a problem, but a tendency to miss payments could be an issue. The modification agent will also consider your current bank relationships as well as your household income.

Find out whether you qualify for forbearance. If you qualify, you won't need to make any payments for a specific period of time. During the forbearance period, late fees are typically waived without consequences. You won't incur late fees and your creditor will not report the account as delinquent to the credit bureaus. However, your balance generally continues to accrue interest charges. Attempt to negotiate the charges; you've got nothing to lose. The forbearance period typically lasts about three months.

Negotiate your credit card agreement terms. For instance, you can request a lower interest rate to make your payments more manageable. Ask your creditor to waive any late fees. Late fees can accumulate and increase your balance considerably. If you satisfy the criteria for a credit card agreement modification, the card company will likely lower your minimum monthly payment.

Offer a reduced settlement. If you don't qualify for a credit card agreement modification, settling the debt might be your next option. If you have a lump sum, make an offer. If you cannot offer a lump sum, most companies are willing to set up a three- month-installment payment plan. This option generally requires at least a 90-day delinquency status on your account. Although it will have a negative effect on your credit report, it could prevent you from dealing with stressful collection calls.

Sign up with a debt management service. While with a modification you modify the card agreement terms, debt management allows you to pay a fraction of your credit card balance. The remainder portion, the forgiven amount, is written off. Although a credit card agreement modification does not have a negative impact on your credit rating, settling the debt does have a negative affect. Nonetheless, this might be your best choice if you're sure that you cannot resume making monthly payments. For tips on how to choose the best debt management plan, please refer to the "Resources" section below.

Overall, modifying your credit card agreement can help you preserve your good credit rating. If you have a good payment history, credit card companies will often work with you so you don't fall behind on your payments. If you find that you don't qualify for a card modification, you still have options. You can attempt to settle your debt or you can sign up with a debt management company.

Copyright © 2011 Ana Jackson. All Rights Reserved. Reproduction in whole or in part constitutes plagiarism, is illegal and strictly prohibited.


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