Dealing With Your Creditors
How best to deal with my creditors? Interacting with creditors, especially when you do not have money to pay them, can be very frustrating and stressful. The challenge is being capable of getting them on your side despite difficult financial situations.
There are several ways of stopping unnecessary harassment and even a number of ways to bargain for improved re-payment terms, deferred payment schedules, as well as other possible arrangements when times are tough. Unfortunate financial circumstances should not cause a rift in your good relationships with creditors. Consequently, the creditors must recognise that you have a right against unfair debt collection and credit reporting practices, no matter what is laid down in the Fair Debt Collection Practices Act.
As soon as you get into problems with your personal cash-flow, it is recommended that you do not wait until you have missed your payment schedule. Instead, inform your creditors early of your concern. In that way you do not create a delinquent impression as you make clear your sincerity in desiring to settle your responsibilities. In the same way solutions to the problem may be provided ahead of time. Creditors will be willing to help provided they are aware of your situation.
Early intervention really is the key here. Doing so may eliminate or lessen the chance of late charges. You may even obtain the option of paying only the interest in the meantime. The service or utility may not be halted either. Depending on the need, it may also be possible for your payment to be deferred to as far ahead as the end of your contract. In other words, you may be able to negotiate for a more manageable payment scheme. Acting in this way, your account will remain under their care instead of being handed on to those collection or credit reporting agencies.
Make sure nevertheless that before contacting them, you have figured a clear plan of action. This plan should be realistic but, at the same time, auspicious to you and the creditors. Consider how much remains of your income for other expenses. Make a list of all your fixed payments such as those for mortgages, loans, etc.. Since you are already on a tight budget, you may want to reduce your flexible expenses such as clothes, nights out, etc.. It is also wise to consider possible ways of obtaining additional income. When your financial status has been laid down and you have identified some sound courses of action, present it to the creditors. They will give you feedback about it as well as maybe providing suggestions.
Your creditors may come from different institutions and make sure that you give priority accordingly. For example, creditors from law enforcement agencies imposing on you as a result of court judgments for child support, are usually the strictest when it comes to making payments on time. They may upset your tax returns, collect your income, enforce encumbrances on property or suspension of licenses and much else besides. They should normally be at the top of your priorities. Next in line would be those concerning investments such as houses and cars because they can easily order turn over of the property. Understandably, creditors from insurance, utility, and credit card companies should be prioritized also but they normally offer programs including some leeway during hard times. To get those is what you want to negotiate properly, so work it out promptly when you see symptoms of financial crisis.
There are several ways of contacting your creditors. Initial explanation may be done by telephone. It helps if you are ready with a script so as to keep your cool and alert while you clearly state the details of your situation. Take careful note of what the other person is telling you. For example, further meetings may be proposed and you definitely do not want to miss them. In case arrangements are finalized by telephone it is advantageous to send a confirmation letter stating what you have actually agreed. This documents your conversation and safeguards you from possible denial and future inconsistencies.
The bottom line is that whoever the creditor is, you really need to understand the consequences of not being able to pay them on time and weigh it against realistic figures. Do not expect that by doing so, they will simply forget about your credit. It will definitely remain your responsibility but you can make it more controllable by acting correctly.
Read on now for details of Debt Consolidation.