Prioritize
Start at the top of your list of priorities on your Debt Prioritization and list how much you have to pay the creditor to keep yourself out of immediate hot water. The electric company may be happy if you pay one month’s bill. The bank may be willing to accept 60% of your monthly mortgage payment for a few months. You may not know how much is necessary until you begin to negotiate with the creditor.
Be Aggressive
Many people just want to run and hide from creditors and send in money when they can, hoping it will take care of the problem. The best solution is to be aggressive. If you are not going to be able to make a payment, you should call before it is due. If you are past due, you still should call. Call the creditor and tell the representative that you are having money problems. Give the real reason, such as you were laid off of work or are getting a divorce, etc. You should not give them the real reason if it is something like you went on a spending spree or you decided to just take the summer off. You want to appear like a reliable person who has fallen on hard times. Creditors are often sympathetic to consumers with real problems and you may be pleasantly surprised by the reaction you receive.
Arrange a Payment Plan
When you call, be polite, calm, and firm. Explain that you want to make a payment arrangement. Tell them what you can afford to pay this month and what you can afford to pay next month. Be clear that you intend to make payment in full eventually, even if this is not the case.
You can also consider extending your payment plan with smaller payments or arranging to defer payment for one month. Get all payment plans in writing.
Set Your Bottom Line
Before you call a creditor, you need to keep in mind exactly how much you can afford to pay. Do not agree to pay more than this amount no matter what. It may take you several phone calls to get the creditor to agree to a reduced payment. If you are told no, keep calling until you get a different answer. Ask to speak to a supervisor if you cannot make headway with the representative. Explain that you want to arrange a payment plan in exchange for the creditor removing negative references on your credit report. One such plan would be that you agree to a certain amount and if you make the payments for three months the creditor will change the account status to a neutral status and then if you continue to pay for another three months, to change it to a positive status.
Most creditors are going to agree to accept partial payments from you. Some money is better than no money in their eyes. But you have to be willing to go to them and ask for this type of arrangement. Most creditors will find this type of arrangement easier and cheaper than repossessing the item or obtaining a judgment against you.
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