Credit Repair: How To Deal With Your Creditors
If you are in danger of credit problems because you have more debts than you can handle, there are things you can do at least keep your creditors reasonably happy.
First, prioritize your debts or rank them in terms of the ones that can give you the most trouble the quickest. If you're three months behind on your utility bill and the company is threatening to cut off your power, you should deal with this debt first.
Second, be sure to keep an accurate log of all phone conversations with creditors and copies of all correspondence.
This way, you will have a good record of what's going on, to whom you spoke last, the date of that conversation and its result. It's not uncommon for large corporations to have different people or even different departments contacting you about late or missed payments. If you keep accurate records, you will always be able to defend yourself against the claim that you have been unresponsive or uncooperative.
It's kind of human nature to want to run away and hide from creditors. But it's better to be aggressive. If you know you are not going to be able to meet a mortgage or credit card payment, call the company before the payment is due. Tell the company's representative why you are having money troubles. Be sure to give a real reason for your problems such as a divorce or loss of a job, and not just some feeble excuse.
If you can give your creditors a real reason for being in financial trouble, you may find that they are sympathetic and willing to work with you.
Your next step is to arrange a payment plan. When you contact your creditors' representatives, explain that you know you are behind in your payments but that you want t make a payment arrangement. Let them know what you can afford to pay this month and the next. Make certain they know you intend to make full payment eventually.
You might also see if one or more of your creditors would be willing to let you skip a month's payment. Be sure to get all payment plans in writing. If the company's representative does not volunteer to mail you the plan in writing, send a letter requesting that he or she do so. Calculate just how much you can afford to pay a creditor before contacting the company. Then, do not agree to pay any more than this, no matter what the company demands. It may take a number of phone calls before the company agrees to a reduced payment. If the company keeps saying "no" to your offer, keep calling until you get a different answer. Or ask to speak to the representative's supervisor as he or she may have more authority to work out a plan with you.
Finally, always try to negotiate. Your landlord may be willing to let you miss a payment now if you make it up at the end of the lease.
If you have a mortgage, ask your lender if they would take a 60 percent payment now with the promise to make this up over the next few months. If you will be paying late, explain the circumstances and ask that at least they waive the late fees.
If you are having trouble paying for your utilities, see if you can switch to a budget plan or set up a partial payment plan. Most utilities will not cut off your service so long as you are making some kind of payment.
You could sell your car and purchase a cheaper one if a car payment is a problem. If you're going to make a late payment, be sure to let the lender know in advance. Otherwise, you might find your car has been repossessed. You might ask for an extension of the loan. For example, if you have 36 months left to pay, you might ask to extend this to 42 months in return for lower monthly payments. And if you are leasing a car, see if you can terminate the lease early. All the leasing company can say is "no."
Being in serious debt is never any fun. But if you tell your creditors what you will do and then do what you say, things will get better.
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MORE RESOURCES:
Bush: US will work with partners on credit crisis The Associated Press - WASHINGTON (AP) — President Bush says world's wealthiest industrial countries will work together to attack the credit crisis spreading around the globe. ... World Leaders Offer Unity But No Steps To Ease Crisis Bush vows coordination with world powers on financial crisis Time to Act |
 Boston Globe | Without real leadership, we face disaster guardian.co.uk, UK - There is a combination of a worldwide bank run, seizure of credit markets and collapse of asset values that could plunge the globe into a depression. ... Video: Overseas Markets Fall on Financial Turmoil Fears Asian credit default costs soar to record - traders Stocks rally fades on credit market worries |
 The Associated Press | US will work with partners on credit crisis: Bush CBC.ca, Canada - It was the 21st time in 26 days that the president has spoken publicly about the credit crisis gripping financial markets and dragging down stock markets. ... Video: Bush: 'We Must Work Collaborately to End Crisis' |
Is my credit union safe? Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer The government-run National Credit Union Share Insurance Fund insures most deposits at credit unions, ... Credit unions alternative to banks Got Your Money in a Credit Union? You Too Are Safe In tumultuous financial times, credit unions might be an option to ... |
 China Daily | Lehman Credit-Default Swap Payout Could Climb as High as $365 Billion Washington Post, United States - By Heather Landy NEW YORK, Oct. 10 -- In what may shape up to be the most expensive payout ever in the credit-default swap market, sellers of insurance ... STOP FINANCIAL WMD'S: Credit Default Swaps Lehman Credit-Swap Auction Sets Payout of 91.38 Cents (Update1) Insurance on Lehman Debt Is the Industry’s Next Test |
 BBC News | Credit crisis should not hurt poor, ministers urge Reuters - By Lesley Wroughton WASHINGTON (Reuters) - Major economies should not use the global credit crunch as an excuse to renege on aid promises to poor countries ... Video: IMF: Timing right for G7 Credit CRISIS ALERT IMF endorses plan by rich countries to fight credit crisis |
 Los Angeles Times | Fears Grow That Tight Credit Could Crush GM, Ford NPR - Standard & Poor's downgraded the credit of both companies and their financing arms this week. AFP/Getty Images Ford F-150 trucks sit at a dealership in ... Video: Money Minute: GM, GE, Oil CREDIT WATCH HITS GM, FORD GM, Ford too big to fail? |
Is the era of easy credit over for the long haul? International Herald Tribune, France - For Clark, and for a nation of consumers heavily dependent on credit, there are growing signs that those rough times could prove to be more than just a ... |
 WNCT | Anatomy of the American Financial Crisis: How It is Turning into a ... Center for Research on Globalization, Canada - Its failure created a domino effect among other international banks that had lent to each other in the international credit chain. ... Where did all that 'lost' money go? Credit freeze sees small cracks Market news this week for strong stomachs |
Financial troubles spread to credit unions Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer It's not just giant banks on the brink these days: Losses are clobbering nonprofit credit unions that ... |
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