Credit Card Debt Modification

Credit Counseling

Credit counselors approved by the U.S. Department of Housing and Urban Development are available in most communities nationwide. An initial consultation with a counselor is usually free, and virtually all of them specialize in credit card management. The agencies offer a variety of resources for handling credit card debt, ranging from classroom training to ongoing help from a specific counselor. Find a counselor in your area by visiting the HUD website.

Debt Management Plans

Counselors can seek modifications to your credit card accounts after you enroll in a debt management plan offered by the counseling agency. Debt management plans allow counselors to take complete control of your credit cards; these plans are for people who are ready to stop using credit as they pay off their balances. The counseling agency will contact all your credit card companies to seek modifications of your card agreements. Counselors will negotiate lower monthly payments, lower interest rates and will even ask the credit company to reverse some finance charges. The negotiations will be ongoing, as the counselors work with you on a plan to pay off your credit card debt within five years.

Lump Sum Payments

Debt management plans require you to make a lump sum payment to the counseling agency each month covering the monthly payments for all your credit cards, along with a management fee for the counseling agency. The Federal Trade Commission endorses debt management plans as an effective vehicle for eliminating credit card debt. The government-approved counselors leverage their experience, knowledge and working relationships with the card companies to negotiate favorable modifications to your credit card agreements.

Do It Yourself

Not all people are pleased with debt management plans. The plans can be restrictive because the counseling agencies place you on a strict budget, with as much of your disposal income as possible going to the card companies. Some people prefer managing that themselves, and it is possible for you to contact your card companies, individually, and negotiate modifications. Ask for lower interest rates, lower minimum monthly payments and more by calling the customer service number on the back of your card. If you're serious, tell the representative that you want to close the account and enroll in a self-directed debt reduction plan. Terms of the plan may be similar to modifications that the counseling agency would ask for.