THE HELP DESK The Help Desk: Top Tips

Struggling with credit card debt?

Unaffordable credit card debt is a heavy burden; here are some tips to lighten the load.

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By Gerri Willis, CNN personal finance editor

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For more information on managing your largest investment, check out Gerri Willis' 'Home Rich,' now in bookstores.

NEW YORK (CNNMoney.com) -- Rising unemployment is pushing strapped U.S. borrowers over the edge, with delinquencies and balances on delinquent credit cards surging -- that's according to an industry report. Here's your step-by-step guide on what to do if you can't afford your credit card payments.

1. Contact your lender

Let's say you've lost your job, or are looking at a steep medical bill, and worried you won't be able to make your credit card payment.

Make sure you call your lender and explain the situation. The sooner you contact them, the more willing they may be to work with you.

More and more credit card companies are willing to negotiate. Realize that they're not being charitable -- they're just trying to get what they can out of you.

So, what can you ask for? If you can make some sort of monthly payment, ask your issuer to lower your rate and possibly waive your fees. Also ask to work out a payment plan.

If the first person you speak with can't help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you.

Document all conversations, including the name and title of the person you spoke with, date, time and results.

Go to helpwithmycredit.org -- a Web site operated by credit card companies for more information on dealing with debt issues.

2. Get your debt forgiven

Increasingly, credit card issuers are accepting dimes, if not pennies, on the dollar as payment in full. But if you're striving to get a debt forgiven, don't expect a sweetheart deal.

Generally you have to meet certain criteria. For example, most cardholders have to be delinquent for at least 90 days and -- usually -- your credit report needs to show that missing payments isn't a common occurrence. But that doesn't mean that once your debt is settled, there are no consequences.

Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must pay income taxes on that amount.

If you're looking for guidance on negotiating with your credit card company, go to the National Foundation for Credit Counselors at NFCC.org.

Don't waste your time with third party debt settlement companies. These companies charge you fees for a service you can do yourself -- for free.

3. Prioritize your payments

If you're having trouble making your monthly bills, it's time to prioritize.

First, look at your immediate needs. Pay your mortgage or rent bill, keep making payments to your utility company and keep food on your table.

Then start to think about paying down your credit card balances. Find out which card has the highest interest rate and pay that one off quickly while making modest payments to your other credit cards.

Remember that credit card debt is unsecured debt -- meaning that there's not much that the credit card company can take away from you if you're delinquent. You should always strive to pay off your debts. And stop using your credit cards until you pay off your current balances.

-- CNN's Jen Haley contributed to this article.

Got a financial dilemma? Go to CNNMoney.com/helpdesk to submit questions, read the Help Desk articles and check out new Help Desk videos. And tune in to CNN's Newsroom Tuesdays and Fridays, when Gerri Willis and other experts answer your questions. To top of page

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