One of our readers, Miss Rokhaya, is in a bit of a tight spot, and wondered what she should do about her debt:

Dear Mr Credit,

Thanks for this nice site. I have an important question. I am really worry about my credit right now. Here is my situation:

I am an international Student who just graduate from college. I used to work as a GTA at the University and use to be able to make my monthly payments. I owe 3 credit card with a $1000, $1000, and $500 credit line. I nearly owe now $2300.

The problem is as an International students I am very limited in work right now. I graduated and am not allowed to work at the university.

US Immigration allows me to work for one year but only in my field of work. I am still looking for job but cannot find any (I have 3months to look for a job). If I don’t find one in within these 90 days I have to leave the country. This is pretty much my situation.

If I don’t find a job, I will leave the US but do not have nothing to pay my credit. My question is, how I can explain that to my creditor to have a grace for my credit? I do not want to file for bankruptcy as this may ruin my carreer.

Thanks for your help,
Miss Rokhaya

Miss Rokhaya, thanks for your question. this is a difficult situation, but not an impossible one. You actually have a lot of options.

First, you might want to call someone in immigration and have them define very carefully what a job “In your field” means. I’m betting you can stretch that a little bit if you have to. Especially if it’s just temporary while you look for a better position.

Things like freelance writing in your area of study, or tutoring other students might bring in some money quickly, even if it’s not going to be enough for a permanent solution.

Second step, call your credit card companies. Explain to them that you have lost your job, and ask for a hardship agreement.

Most credit card companies have plans in place to help people who are unemployed – but you are going to have to tell them that’s the case, and specifically ask that they temporarily freeze your payments.

Usually credit card hardship programs can freeze your monthly payments for up to three months. That should give you enough time to figure out a permanent position and get everything sorted.

Don’t be afraid to call and talk to your credit card company. If you get a rude, or unhelpful person, either speak with their manager, or hang up and call back. Sometimes it takes several phone calls to get an issue resolved, but it is possible.

If things do go badly, and you cannot make your payments, and you cannot get your credit card company to work with you, then consider debt consolidation, or debt negotiation instead. Just make sure that you investigate the company carefully, because some of them are scams.

Just take things one step at a time. Call all three of your credit card companies and ask them to help you. While you have them on the phone, make sure you also ask them to remove any fees that are on your cards (late, over the limit, etc.) You can also ask them to reduce your interest rates. Truthfully, many, many things can be accomplished just by asking, and then by being persistent – especially with the credit card companies.

Thanks for your question!

American Express Interest Rates Are Murder!

On a similar note, we had another reader, Rea, who is having problems with her American Express account:

Mr. Credit Card, I hope you can provide some advice on my situation. I have contacted American Express twice via mail requesting they lower my APR – it is currently 27% – crazy.

I was late twice in 2008 and explained to them that my mother became quite ill was hospitalized and eventually placed in a nursing home. Because I was managing her affairs I forgot about my own.

I make my monthly payments and have been a long term customer of American Express. To no avail, they will not budge. I’m thinking of writing a letter to their CEO, Kenneth Chenault and appeal to him for some relief.

Do you have any other suggestions for me? I don’t want to default on any of my debt, but I am getting no where with the American Express debt because all I am paying is interest. HELP!

Sincerely,
Rea

Rea, I am sorry to hear about your mother’s difficulties. It is always hard when you are trying to manage a family member’s finances as well as your own – especially in the middle of health difficulties.

I can tell you from personal experience that some of the financial tools on FlyLady’s website, (The FACE Journal is free) can help with managing multiple people’s accounts.

As far as American Express running you around, yes, you can fix that.

The first thing you will want to do is explore your balance transfer options. Paying 27% on any credit card balance is unacceptable. So, check out their competition first.

Once you know what the competing offers are, give American Express a call back. Talk to a manager, or better yet, someone in the retention department.

Tell the rep you speak to that you are going to transfer your balance today if they can’t help you. Keep reiterating that you are a long-time customer who has always made your payments with them, and that you really hate to switch. However, if they can’t help you, you have no choice, do you?

The retention department is probably going to be your best bet, so go ahead and ask to be transferred to them. If the rep won’t help you get there, then speak with their manager.

As long as you are persistent and you refuse to hang up that phone without a resolution, then you’ll get your interest rate reduced.

If they give you any trouble, then tell them all about the competing offers you looked into. “I can get a 9% rate from XXX, and a 3% into rate from XXX – what can you do for me?”

If American Express still refuses to budge, hang up, wait a day or two, and call right back. Give it at least two chances on the phone before you give up. If, after that you are still in the same boat, then go ahead and balance transfer all or some of your debt.

Just remember that this is your money, not theirs, so you are the one who is going to have to fight for it. If you are willing to fight, you will get what you want.

Thanks for your question!

Have a question for us? Leave a comment below!

Keep Reading:

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This entry was posted on Friday, February 20th, 2009 at 07:45 and is filed under Reader's FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.