How to Talk to Your Creditors About Your Debt
When you’re in debt, talking to your creditors may be the last thing you want to do. In fact, if you’re struggling to make payments, you might want to avoid even thinking about your creditors. Unfortunately, they won’t forget about you. Bills will keep coming and, if you start missing payments or making payments late, creditors will start calling. They may even send a collection agency after you.
This isn’t a situation that you want. Collection agencies can be very aggressive and, while there are rules that limit what they can and cannot do, their calls can still be very bothersome and sometimes even harassing.
If you’re in a situation where you’re having a hard time meeting your financial commitments and paying your debt, it’s better to contact your creditors before they contact you. Here are some tips for doing just that.
Try to Call Before you Miss a Payment
If your financial situation is feeling tight and you think that you might not be able to make all your payments, try to contact your creditors before you miss any payments. This can be tough to do, and sometimes circumstances come up suddenly that make it difficult to pay your bills, but calling creditors before you miss a payment is much more effective than calling them afterwards.
If you have a long history of paying your bills on time, a creditor may be more willing to work with you if you explain that your next payment might be late. They may agree to reduce your interest or give you more time to pay. It’s more effective to talk to them before you miss a payment than if you fall behind and call them later.
Explain your Situation and Be Honest
When you call your creditors, explain your situation directly and clearly. They don’t need to know everything that’s going on in your life, but giving them an honest summary of why you’re having trouble making payments will help.
For example, saying something like “I know my bill is due next week, but I needed to take some time off work due to an illness, so I don’t have the funds available right now” can be helpful.
Know What You Want
Why are you calling your creditors? Do you need more time to make your next payment? Is the interest rate tough to pay your bills? Would you like to extend the timeframe that you have to pay your debts so that each payment will be smaller?
Before you call, figure out what it would take to make handling your debt more manageable. This will help you if the creditor asks what assistance you’re looking for and it will let you know when you’ve achieved your goal.
During the call, take notes of who you talked to, what they said, and any other important details. This will help you remember what was discussed. Having detailed notes can be especially helpful if you don’t get the situation resolved in the first phone call.
Get it in Writing
If the creditor agrees to lower your interest rate, change the due date on your debt, give you more time to pay, or anything else, make sure you get this information in writing. A written agreement will fully explain the situation so that you can refer to it later. It will also provide you with concrete proof of the revised situation with your creditor.
If your first phone call doesn’t result in the changes you want, try again later. Speaking with a different person at the company or modifying your strategy can result in a different outcome.
When to Get Help
Some creditors may be willing to change the terms of your agreement to make it easier for you to afford your payments. However, while they may reduce the amount of interest you’re being charged or give you more time to pay, they likely will not reduce the actual amount of your debt.
If you’re not able to make your payments even after speaking with your creditors, you may want to speak with a Licensed Insolvency Trustee. A trustee can review your situation and provide you with details on the debt relief options available to you. One process that may be an option is the consumer proposal process. A consumer proposal is a legal process that allows you to make an offer to your creditors to pay a portion of what you owe rather than the full amount. A consumer proposal can only be administered by a Licenced Insolvency Trustee.