How To Deal With Creditors And Negotiate A Debt Settlement


A mistake many people make is try to avoid having to deal with creditors. Once the realization that they are in financial trouble hit, they imagine that by dodging their creditors the problem will just go away.

This is the worst thing anyone who find themselves in this position can do. Do not wait until you start receiving final demands. It is not the easiest thing to do, but contacting your creditors — don’t forget the utility companies — as soon as you have a problem paying your bills, should be first on your list.

Creditors are usually not the ogres we consider them to be. In fact, most creditors understand that things can go wrong. They appreciate honesty and most will go out of their way to accommodate you and help find a solution.

You can get a debt   management  company to assist you in sorting out your  finances  and repayment of debts. This will mean you do not have to negotiate with creditors yourself. However, considering the substantial setup and other monthly fees you have to pay them, this option could cost you much more than it is worth. Should you decide to take this route, do your homework and make sure you find a debt management company of long standing with a good reputation.

There are free services available to help put you back on the road to a healthy financial position. The Consumer Credit Counseling Service (CCCS) and Citizens Advice Bureau (CAB) both offer advice at no cost. They will also talk to your creditors on your behalf and negotiate payments that you can afford.

If you decide to deal with creditors yourself, following a plan can make things much simpler. Start by making a list with the following details:

  • Creditor name.
  • Contact details.
  • Reference/account numbers.
  • Amount owing.
  • How much you can afford to pay on a monthly basis — carefully calculate your financial situation and decide what you can afford to pay each creditor.
  • Other pertinent information.
  • A financial statement, detailing your income and all expenses.
  • A budget.

Draw up a letter with your name, address and telephone numbers at the top. Include the correct details for every creditor, especially the account and/or reference numbers.

  • Explain why you cannot meet your financial obligation.
  • Spell out what you are able to do at this stage.
  • Do not commit yourself for anything more than you can afford.
  • If you cannot afford any payment, ask the creditor to stop interest and allow you a leniency period with no payment of three to six months. Alternatively, offer a token payment (even if it is only $1 per month).
  • Undertake to keep the creditor up-to-date should your financial situation change — and do it!
  • Be honest and straightforward in your dealings. Keep records of every letter your write or receive, as well as phone calls.
  • Keep your promises and make payments when they are due.

Getting into financial difficulty is often easier than getting out of. However, if you keep a clear head and accept your responsibilities, not all is lost. Don’t try to ignore it, deal with creditors and you will sleep a lot better.

Source by Paul Sarwana

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