Could Credit Card Hardship Assistance Help Jane With $34,467 of Debt?
Jane has $34,467 in credit card debt at an average APR of 24.52%, with approximately $1,223 in monthly payments.
Instead of borrowing additional money, tapping retirement savings or allowing the accounts to become delinquent for debt settlement, Jane could ask her creditors whether they offer credit card hardship assistance.
Depending on the creditor and Jane's financial circumstances, hardship assistance could reduce an interest rate, lower a monthly payment, waive certain fees or temporarily modify the normal repayment terms.
That can make this option extremely attractive.
However, Jane has five targeted credit card accounts, and each creditor may have completely different eligibility rules, benefits and program lengths.
Meet Jane Doe
Jane's household brings home approximately $8,441.86 per month, while her reported expenses total approximately $8,686.
That leaves her approximately $244 short each month before unexpected expenses occur.
Jane Needs Lower Payments Without Creating More Debt
Jane's current budget gives her very little room for unexpected costs.
A lower required payment could immediately improve her cash flow. However, simply moving the balances to another loan or credit card doesn't necessarily address the underlying problem.
Jane's goal: find enough payment relief to make her budget sustainable without taking on another loan or intentionally falling behind on her debts.
Jane Is Paying 24.52% Average Interest
Jane's five targeted credit card accounts total $34,467.
Her current required payments total approximately $1,223 per month.
Approximately $704.36 of that amount is currently going toward interest and fees, leaving only about $518.59 to reduce principal.
How Could Credit Card Hardship Assistance Help Jane?
Credit card hardship assistance is provided directly by the creditor.
Jane contacts each card company, explains that she is experiencing financial difficulty and asks what payment-assistance options are available.
There is no single standard program.
One creditor may offer a lower interest rate. Another may reduce Jane's monthly payment. Another could waive certain fees. Another might offer only temporary relief.
That flexibility can be valuable, but it also makes this strategy less predictable than a coordinated Debt Management Plan.
Important: Jane should ask for the exact interest rate, required payment, program length, account status and consequences of a missed payment before accepting any hardship arrangement.
The Good: Credit Card Hardship Assistance Can Lower Jane's Payments
The strongest advantage is that Jane may be able to make her existing credit card debt more affordable without replacing it with another debt.
Credit Card Hardship Assistance May Lower Jane's APR
Jane's current average interest rate is 24.52%.
If one or more creditors substantially reduce those rates, a much larger percentage of Jane's monthly payments can begin reducing principal.
Even a temporary interest-rate reduction can potentially save Jane hundreds of dollars in interest.
Credit Card Hardship Assistance May Lower Monthly Payments
Jane's current targeted credit card payments total approximately $1,223 per month.
If her creditors reduce those payment requirements, Jane may be able to eliminate the $244 monthly budget deficit she currently faces.
The exact amount of relief would depend on what each creditor offers.
Jane Doesn't Need a New Loan
This strategy is different from debt consolidation.
Jane isn't applying for a $34,467 personal loan.
She isn't opening a balance-transfer card.
And she isn't borrowing money from her retirement plan.
She simply asks the companies she already owes whether they are willing to temporarily modify the existing repayment terms.
Jane Doesn't Need to Intentionally Stop Paying
This is also a major advantage compared with debt settlement.
Jane does not need to intentionally allow all of her accounts to become severely delinquent simply to ask creditors whether hardship assistance is available.
That can help her avoid some of the credit, collection and legal risks associated with deliberately stopping payments.
The Good:
- Interest rates may be reduced.
- Required monthly payments may be reduced.
- Certain fees may be waived.
- Jane can work directly with each creditor.
- She doesn't need another loan.
- She doesn't need to tap retirement savings.
- She may be able to remain current while receiving assistance.
The Bad: Credit Card Hardship Assistance Can Be Difficult to Coordinate
The biggest weakness is inconsistency.
Jane has five targeted credit cards, and every creditor can have different hardship policies.
Credit Card Hardship Assistance Can Be Difficult to Qualify For
Creditors establish their own eligibility requirements.
Jane may need to demonstrate that she is experiencing a qualifying hardship and that the proposed modified payment fits her financial circumstances.
One creditor might approve her while another rejects the request.
That means Jane cannot assume that every one of her five accounts will receive assistance.
Not Every Account May Be Eligible
Even within the same creditor, program eligibility can depend on factors such as account status, payment history, current financial hardship and the specific card agreement.
Jane could therefore receive excellent relief on three accounts while receiving little or no relief on the remaining two.
Some Credit Card Hardship Assistance May Last Only a Few Months
Duration can also vary significantly.
Some hardship accommodations are temporary.
For example, Jane could receive reduced terms for only three months on one account while another creditor provides a longer arrangement.
That creates uncertainty because Jane's payment could increase again when the temporary benefit expires.
Jane Has to Track Multiple Expiration Dates
This is one of the biggest practical weaknesses of handling hardship programs on her own.
Jane may have to keep track of:
- Different monthly payments
- Different interest rates
- Different due dates
- Different program start dates
- Different program expiration dates
- Different rules for each creditor
If two or three programs expire close together, Jane could suddenly see her monthly obligations increase.
A Missed Payment Could Cause Jane to Lose the Assistance
Some hardship arrangements require Jane to make every agreed payment on time.
Depending on the creditor's specific agreement, a late or missed payment could cause the reduced terms to end.
The creditor may then return the account to its normal interest rate, payment structure or other contractual terms.
Jane needs to understand this before enrolling. She should specifically ask each creditor what happens if a payment is one day late, several days late or completely missed.
Credit Card Hardship Assistance May Close or Freeze Jane's Accounts
Some hardship arrangements may require the account to be closed or suspended from additional purchases.
At first, Jane might view that as a disadvantage.
But in her situation, it can actually be helpful.
Closing the Cards Can Protect Jane From Accumulating More Debt
One of Jane's biggest risks throughout this entire case-study series is rebuilding the balances after receiving relief.
If the cards remain available, a lower payment can simply create enough room for Jane to start charging again.
Closing or freezing the accounts removes that temptation.
For Jane, account closure may actually be a positive feature. Her goal is to eliminate credit card debt, not preserve additional borrowing capacity.
Closing an account can affect credit utilization and other factors, so the precise effect on Jane's hypothetical 675 credit score cannot be predicted.
Credit Card Hardship Assistance Offers Flexibility but Less Consistency
Jane's previous Debt Management Plan case study provided one coordinated repayment structure across her eligible accounts.
Individual hardship assistance works differently.
Jane deals directly with each creditor.
| Feature | Credit Card Hardship Assistance | Debt Management Plan |
|---|---|---|
| Who Jane Works With | Each creditor separately | Credit counseling agency coordinates eligible accounts |
| Monthly Payment | Different payment for each creditor | One scheduled DMP payment |
| Interest Rate | Depends on each creditor's offer | Creditor concessions coordinated through DMP |
| Program Duration | May be temporary and vary by account | Jane's modeled plan lasts five years |
| Eligibility | Determined separately by each creditor | Eligible accounts reviewed together |
| Budget Counseling | Not necessarily included | Included with credit counseling |
| Tracking | Multiple arrangements and expiration dates | One coordinated repayment program |
That difference explains why hardship assistance receives a strong grade for Jane but doesn't score quite as highly as the Debt Management Plan.
Hardship assistance may produce excellent creditor-specific concessions, but Jane has to manage the programs herself and the benefits may not last long enough to create a complete repayment strategy.
The Ugly: Credit Card Hardship Assistance Has No Separate Major Downside for Jane
For Jane's hypothetical situation, there isn't another major consequence that rises to the level of an "Ugly" category.
The weaknesses are already captured in the "Bad."
The programs can be difficult to qualify for.
Not every creditor may participate.
Benefits may be temporary.
Accounts may be closed or restricted.
And Jane may have several different arrangements to manage.
However, hardship assistance does not inherently require Jane to:
- Take out another loan
- Transfer her debt to another card
- Withdraw retirement savings
- Take a loan from her 401(k)
- Pay a for-profit settlement company
- Intentionally stop paying every creditor
For Jane, we don't identify a separate "Ugly" consequence. If she qualifies for meaningful concessions and carefully manages each agreement, hardship assistance can be a legitimate and relatively low-risk debt-relief option.
Credit Card Hardship Assistance: The Good, The Bad and The Ugly
The Good
Jane may receive lower interest rates, lower monthly payments, fee reductions or other concessions directly from her creditors. She doesn't need a new loan, doesn't put retirement savings at risk and may be able to stay current while receiving help.
The Bad
Qualification can be difficult, not every account may qualify, and benefits vary by creditor. Some arrangements may last only a few months. Jane also has to track different terms and expiration dates, and missing a required payment may jeopardize the concessions.
The Ugly
For Jane's situation, there isn't a separate major "ugly" consequence. The biggest weakness is inconsistency: she may receive excellent relief from some creditors and little or no assistance from others.
Credit Card Hardship Assistance Can Work if Jane Manages the Details
One of the strongest features of hardship assistance is that Jane asks the creditors themselves for help.
There is no new lender.
There is no balance-transfer promotion waiting to expire.
There is no retirement account at risk.
And there is no for-profit settlement company waiting to negotiate months later.
The challenge is coordination.
Before Jane agrees to any hardship arrangement, she should record:
- The monthly payment
- The hardship interest rate
- The effective date
- The expiration date
- Whether the account will be closed or frozen
- Whether fees are waived
- What happens after the hardship period ends
- What happens after a late or missed payment
The strategy can work well, but only if Jane understands how all five accounts fit together inside her monthly budget.
Use DebtWave's Credit Card Hardship Programs Directory
Because hardship assistance varies by creditor, Jane should not assume that one company's program will resemble another company's program.
DebtWave's main hardship-program resource is designed to help consumers research creditor-specific options.
DebtWave Resources
- Visit DebtWave's main Credit Card Hardship Programs resource to find creditor-specific information.
- Compare Jane's Credit Counseling & Debt Management Plan case study.
- Use the Debt Management Plan Calculator to compare current credit card terms with estimated DMP terms.
- Learn more about getting help with credit card debt .
How Does Credit Card Hardship Assistance Compare With Jane's Other Options?
We are evaluating the same Jane Doe financial situation using ten different approaches to dealing with $34,467 of credit card debt.
| Debt Relief Option to Pay Off Credit Card Debt | Grade |
|---|---|
| Personal Loan (Debt Consolidation Loan) | D+ |
| Credit Card Balance Transfer | C- |
| Withdrawing Money From a 401(k) | F |
| Taking a Loan From a 401(k) | D- |
| Credit Counseling & Debt Management Plan | A |
| Debt Settlement | D- |
| Credit Card Hardship Programs | B+ |
| Borrowing Money From a Friend or Family Member | D |
| Filing Chapter 7 Bankruptcy | D- |
| Filing Chapter 13 Bankruptcy | F |
The grades in this series are specific to Jane's hypothetical financial situation. Actual hardship availability, eligibility and creditor concessions vary.
Credit Card Hardship Assistance: B+
Credit card hardship assistance is one of the stronger options we've examined for Jane.
She may be able to lower her interest rates and monthly payments without borrowing additional money, transferring balances or putting retirement savings at risk.
She also avoids one of the largest problems with debt settlement: she doesn't need to intentionally stop paying creditors simply to ask for assistance.
But there are important limitations.
Not every creditor will necessarily approve Jane.
Not every account will receive the same concessions.
Some benefits may be temporary.
Jane could also find herself managing five different payment amounts, interest rates and expiration dates.
And depending on the agreement, missing a required payment may cause the creditor to remove the hardship benefits.
Those weaknesses keep hardship assistance from receiving the same grade as Jane's coordinated Debt Management Plan.
Still, if Jane qualifies for meaningful assistance from most of her creditors and carefully follows each agreement, the strategy can provide substantial relief with relatively limited downside.
Overall Grade: B+
Should Jane Use Credit Card Hardship Assistance?
Yes. Before choosing a more drastic debt-relief strategy, Jane has good reason to ask every creditor whether credit card hardship assistance is available.
The potential benefits are significant: lower interest rates, lower required payments and relief directly from the companies she already owes.
The biggest weakness is inconsistency.
Jane may receive excellent concessions from one creditor and very little from another.
A temporary three-month payment reduction can help today but may not provide a complete solution to a debt problem that could otherwise take years to repay.
For that reason, Jane should compare all of the available hardship offers together before deciding whether the combined relief is enough to make her long-term budget sustainable.
If the creditor-by-creditor offers are too inconsistent, a coordinated Debt Management Plan may provide a more predictable alternative.
Important: Jane Doe is a hypothetical case-study name used for educational purposes. Financial figures are based on a sample financial analysis with certain facts adjusted for this series. Credit card hardship assistance varies significantly by creditor and account. Interest-rate reductions, payment reductions, fee waivers, account restrictions, program length and eligibility are not guaranteed. Some accommodations may be temporary, and failure to comply with a creditor's specific agreement may result in loss of the hardship benefits. Consumers should confirm all program terms directly with the creditor before enrolling.