Hardship can be great. If you’ve got a short term problem, hardship is a great solution. Every financial provider has to provide “Hardship” to people experiencing difficulty with their finances. You have to apply and they will asses your application. The things they may offer include a payment holiday, a pause in interest rates, lower repayments for a period. Financial companies are not required to write off any of the principle.
Having worked in insolvency for many years, I have seen many “hardships agreements”. Granted all the ones I have seen didn’t work, but I have seen many where the person pays off the debt for years, and the balance is higher at the end of it. Recently we saw a hardship arrangement where the client owed $23,800 in June 2009, and in July 07/2017 they owed $30,942! There is one creditor (who we won’t name because we don’t want to be sued) in particular where hardship seems to be just a way to saddle people with perpetual debt.
Hardship can be great, but you need to check at regular intervals that your debt is going down. If you’ve got an agreement with a creditor you should at least get a balance every 3 months and check that your debt is ACTUALLY going down. Ideally, you want the balance to go down by 5%, this will get you debt free in 5 years. If it’s not going down by 5%, hardship might not be working for you and you should look at other options.
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