How Do You Handle Debt When You Have A Disability?

If you are dealing with a disability which has impacted your ability to work or generate income, the first thing you need to do is document everything. You will want to gather doctor notes (verifiable proof of the disability your experiencing), incident reports from your employer or any other type of documentation that will help verify the hardship you are undergoing. If you've already received a "benefits letter" or "awards letter" from the State, this will suffice. Once you have everything documented you will want to notify your creditors of the disability/hardship you are experiencing. If there is a tremendous amount of financial uncertainty in your life, you can either call or write your creditors, explaining that you will be unable to make payments on your debts and you are disabled. Doing all the above can sometimes cause collectors to "discontinue" collections altogether. Although it's not guaranteed, it should at the very least make them "less aggressive" in their collection efforts. It's also important to note that under HIPAA guidelines, creditors legally are not allowed to ask for medical documentation or specifics (if you don't feel the need to share this information). Otherwise you also have the option of signing up with a debt relief company.

How Do You Pay Off Credit Cards?

It's very likely you simply do not have the money to pay off credit card debt in this scenario. Therefore, your best course of action is going to be making yourself as "judgement resistant" as possible and try to negotiate on your debts, in order to settle them for less (either by yourself or with the help of a company). If you are living with a permanent disability that income is going to be exempt from creditor collections. However, debt collectors can still seek to litigate and pursue repayment via savings/checking accounts, IRAs, if a judgement is approved against you. Making your creditors aware that your "income is judgement proof" is a great tactic for negotiating a settlement on the debts you owe. Disability, SSI, Child Support, etc., are all forms of income that are exempt from garnishment. With all this in mind, you can negotiate a repayment on your debts for less with your creditors. They will be much more willing to work with you, since "getting some money" back on debts owed is better than getting "no money back".

Can You Qualify for Reducing or Forgiving Debt?

Yes, you may receive forgiveness on the debt owed, however it will require some work on your end. If your income has dropped severely, you go the route of settling your accounts for less than the full amount owe. In order to do this, you can speak candidly with your creditors and detail your current situation and why your accounts are past due. You should review your income and expenses with the creditors and explain your financial situation. If you simply don't have the money and are delinquent on payments, they are going to be much more willing to work with you than they would be otherwise. However, getting the debt forgiven in its entirety is much more difficult and is a very rare occurrence. This most often this occurs when creditors take consumers to court for debt owed and a judge rules in favor of the consumer.

Can You Qualify for a Hardship Plan?

Most credit card companies do have a hardship plan for consumers undergoing significant hardship. In order to qualify you are going to need to be delinquent on your payments (because if you are making monthly payment you can obviously afford to pay them back) and be able to go into detail about your personal finances. Creditors will typically ask for your income and expenses and want more information regarding your particular situation. The process will vary by creditor and you will have to do this with each debt you owe. Moreover, each creditor has different parameters for how much of a discount you'll receive via a settlement (so definitely this keep in mind). After speaking to creditors, you can typically setup a repayment plan for less and have the debts you owe, settled for less.