There are a number of consumers who believe that they might be eligible for government bailout. However, it is not so. You may see a large number of ads mentioning about some "Obama credit card bailout program" but that's completely misleading. There are no government-backed consumer bailout programs for your personal credit card debts. You'll have to manage your credit cards responsibly and pay off the bills on time.
However, if you're in severe credit card debt, there are some ways you can get relief. Let's take a look at what they are:
- Negotiate a repayment plan with your creditor: You can contact your credit card company and negotiate with it so that you can get an affordable repayment plan to pay off your debts. You can use the various debt calculators available online in order to find out the amount that you can afford to pay toward your debt. You can let the creditor know about that amount and check if he can accept that as your monthly payment towards the credit card debt.
- Debt management plan: If you're unable to negotiate with your creditor and cannot get an affordable repayment plan, then you can go for a debt management plan. You can contact non-profit credit counseling agencies that can negotiate with your credit card company to provide you with a reduced interest rate. However, your creditor may coordinate with the credit bureaus and inform them that you're paying the dues under a debt management plan. But this won't have much affect on your FICO scores.
However, there is one thing you need to consider…
Paid charge off or settlement notation - Negotiating a debt reduction may lead to paid charge off or settlement notation on credit report. This will have a negative impact on your credit. You may also have tax consequences as forgiven debt will be considered as your income by the IRS.
However, it should be noted that a blemished credit report isn't the end of the world. Once you pay off your debts after negotiation with the creditor or through a debt management plan, you should take steps to improve credit score. Once you start taking the right steps, you'll find your scores improving with time.