What is a hardship payment plan? As a business owner, you might be facing financial challenges at different times. If your industry is in a slow season and you have fallen behind with payments, then you need to find a solution.
A hardship payment plan is one option you might consider. Before you rush into this decision, it’s important to ask the right questions so you understand how the program works. Reach out to the financial experts and learn now!
How Hardship Payment Plans Work
When business financial accounts have fallen behind, hardship payment plans are designed to get those accounts back on track. The lenders, such as large banks or credit card companies, work with you directly to mitigate the loss.
These strategies are designed to match your ability to pay, with a custom payment plan to return the account back to good standing again. The main problem with a hardship payment plan is that these options aren’t available until after you have fallen behind on your payments.
Hardship Payments: Personalized Solutions
The simple answer to what is a hardship payment plan is an agreement between you and a lender. Together, you will arrive at a payment plan that fits your unique needs. Changing the repayment terms might make it easier for you to stay current on the account.
Common repayment changes include:
- Lowering monthly payments
- Reducing interest rates
- Waiving a portion of the loan
If the terms of your account are improved, then it is important to stay current with payments. Sticking to the terms of the agreement helps you maintain the favorable terms, so you can eventually pay off your debt.
Pros and Cons of Hardship Programs
It’s important to look at the pros and cons when you are asking “what is a hardship payment plan?” The obvious benefits are listed above, giving you a reasonable way to pay the balance in full over time. This strategy might be effective in helping you avoid bankruptcy and other financial challenges in the future.
A hardship payment plan might also be helpful for protecting your credit score. For example, no credit score reporting could be a negotiated term in the payment program.
You also need to be aware of a few drawbacks to hardship payment plans as well. This negotiation typically happens with the bank directly, and some people don’t know the right way to approach the situation. If you aren’t familiar with the industry, then it’s important to have support from an experienced financial expert.
Alternatives to payment programs include balance transfers, debt consolidation, debt settlement, and more. If you learn “what is a hardship payment plan,” and decide it’s not the right solution for your business, then rest assured knowing there are other options available.