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Talking To Your Creditors

How to Talk With Creditors

If you’re having trouble paying your bills, you first instinct might be to try to hide from your creditors. It can be tempting to avoid calls from creditors when you can’t pay, but this isn’t a strategy that works. Creditors won’t “forget” about your debts and they won’t stop calling. By avoiding them, you’re likely only making your situation worse.

However, by talking with your creditors, you could improve your situation. Not only does speaking with them show a willingness to cooperate and pay, but it might even help you improve your financial situation.

That said, talking to creditors about late payments and your debt can be tough and emotionally difficult. Therefore, it’s important to prepare yourself a little before you talk. Here are some tips for what information you should have available when you call as well as some advice that may make the conversation easier.

Be Consistent and Straightforward

You don’t need to give your creditors your whole life story, but it is a good idea to give them some information about your situation. Briefly explain the hardships you are facing, why you cannot pay your bills in full, and what you are doing to improve the situation. For example, try saying “I lost my job two months ago and I can’t make my payments, so I’m trying to do what I can to stay on budget” or “I have too much debt and I can’t keep up, so I want to see what I can arrange with creditors before I meet with a Licensed Insolvency Trustee.”

Creditors would rather get something from you than nothing, so they may take less rather than have you default on the loan or file for bankruptcy.

Be Honest

Tell the same straightforward story to everyone. If you try to add in details to change a creditor’s opinion of you, you’re more likely to mess up and confuse the situation. In plain language, briefly explain your situation and ask if there is anything they can do.

Take Notes

Write down the name of the person you speak with, the date and time of the call, and any information they’ve given you or arrangements you’ve made. Not only will this help you keep your creditors accountable for what they tell you, but it will also help you remember the details of your calls and keep everything organized.

Get Arrangements in Writing

If you manage to make a payment arrangement with a creditor or arrange a debt settlement, get the terms in writing from your creditor before you make any payments. You want to make sure that your arrangement is official and that you don’t end up in a situation where it’s your word against theirs.

Know What You Can Afford

Look at your budget and figure out what you can afford to pay each month before contacting your creditors. This will give you a goal and will help you determine whether or not your conversation was helpful. For example, if you owe one creditor a payment of $500 each month, and you can only afford to pay them $300 a month, having them offer to reduce your payment to $450 doesn’t really help much, so you’ll know to ask for a greater adjustment if this is what you’re offered.

Plus, if you know all of the numbers and recognize what you can afford, your creditors will see that you are prepared, responsible, and aware of the details of your financial situation. This will reflect well on you.

Information You Should Have When You Contact a Creditor

In addition to knowing how much you can afford, there is other information that you’ll want to have when you call your creditors.

  • Your current statement. Make sure that you know how much you currently owe, your account number (if there is one), and any other important details about your account.
  • A brief history of your account. If you’ve spoken with this creditor in the past, have brief notes with you that describe when you talked and what you discussed. This will help you keep everything organized in your mind.
  • Proof of your situation. If the reason you can’t pay your bills is because you lost your job, for example, it’s a good idea to have proof of unemployment with you when you call, in case the creditor asks.
  • A goal. As mentioned, you’ll want to know what you can afford before you call. You’ll also want to know when you’ll be able to make full payments again, if this is possible. Having a goal in mind will help you work out an arrangement you can afford.

Having all of the details doesn’t just make the conversation easier to have, but it also lets your creditors see that you are responsible, organized, and serious about improving your financial situation.