Lender Hardship Programs

• In some cases, your lender might be the best source of help, advises Steve Bucci in an article for Bankrate.com. Credit card companies, banks, mortgage lenders and auto lenders all offer hardship programs to consumers, but it's not necessarily easy to get in one. You should have a reasonable plan as to how much you can pay each month, a stable income and a good history of paying your bills on time. You usually must make several calls to get your monthly payments and interest rates reduced under lender hardship programs.
  
  

Credit Counseling Plans

• Nonprofit credit counseling services can help you renegotiate your debts with creditors. Most services, such as Consumer Credit Counseling Services of San Francisco, require a modest monthly administration fee for this type of debt assistance. Once your counselor renegotiates the terms of your debts, you make one monthly payment to the agency. The proceeds are distributed among your creditors. The fact that you couldn't fully repay your debts may harm your credit for up to seven years; you also cannot get new credit while under a credit counseling plan.
  
  

Chapter 13 Bankruptcy

• Chapter 13 bankruptcy is similar to a credit counseling plan except that your local bankruptcy court administers the process. You must have steady, stable income to qualify for Chapter 13, according to the book "How to File for Chapter 7 Bankruptcy." It takes three to five years to complete a Chapter 13 debt repayment plan; during this time, you cannot legally get new credit accounts without a bankruptcy court judge's permission. Chapter 13 negatively affects your credit rating for seven years from the date of case filing.
  
  

Chapter 7 Bankruptcy

• Chapter 7 bankruptcy permanently eliminates your obligations to repay preexisting, consumer-oriented debts. No type of bankruptcy case helps non-consumer debts like child support, alimony, recent tax bills and court fines, warns the book "How to File for Chapter 7 Bankruptcy." You must earn less than your state's annual median income level to file for Chapter 7 bankruptcy, and you risk forfeiting many of your assets, including cash and real estate equity. A Chapter 7 case harms your credit rating for 10 years from the date of filing.