In debt and over your head? Make sure you open communication with all your creditors. Call them, write them and inform them that you will be paying them off, but that ou need extra time.
The key is to initiate the phone call, don’t wait until they have to start calling you.
One of the worst mistakes people in debt make is to stop answering the phone calls and ignore the warning collection letters. They start too late to work with the debt collectors.
If creditors are calling you, arrange a time when you can talk – away from work and distractions, and then figure out what you can pay and when and lay out your plan to them.
Most creditors do not want to have to foreclose on purchases, repossess your car or take you into bankruptcy. If you are in financial trouble, the very best thing you can do is to make a plan before you are in serious trouble.
1. Write down all your debts and figure out what you can afford to pay to each creditor. Figure out if you can pay off any small debts to get rid of them.
2. Call your creditors – be proactive. Tell them you will pay, but you need a lower interest rate. Negotiate. If you are able to call and stay in touch before you actually miss payments, you will have a better negotiating hand and more credibility.
3. If you have any cash on hand, try to get a pay off balance that might allow you to pay off a debt at less than its actual value.
4. Offer to send a small amount that you can afford – even if it is only $10.00 – and then send it when you said you would.
5. Stay in touch with your creditors and let them know your situation. If you know you’ll be able to increase payments in one or three or six months, tell them and then do it!
6. Do not allow your creditors to call you at work or make threatening gestures. Follow up in writing if you feel they are harassing you.
7. Do whatever it takes – a second job, selling something – to get your debts paid off.
8. Write a budget for your expenses and live on less. A lot less. Put all the extra cash toward your debt reduction.
9. Stay out of debt and celebrate!
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