Helpful Tips For Talking With A Creditor

Christel Deskins

Posted: Sep 28, 2020 / 03:41 PM CDT / Updated: Sep 28, 2020 / 03:41 PM CDT We all need help at some point in our lives. And when it comes to getting help with money issues, it’s always better to take action and gain control immediately. Fortunately, there are […]

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We all need help at some point in our lives. And when it comes to getting help with money issues, it’s always better to take action and gain control immediately. Fortunately, there are some simple things you can do if you need to speak with a creditor to resolve your issues.

First Things First, Get Ahead Of It

Contact your creditors as soon as you know you may have some trouble making a payment–and do this before you’ve missed it. They may offer assistance programs, and by working with them at the beginning you’ll likely avoid penalty fees and damage to your credit score. 

Know What You Can Ask For And Who You Can Talk To

When you do contact the creditor, ask to speak with the manager or supervisor on your account – they have more authority to work out a deal or payment arrangement. And before you speak with them, know exactly what it will take for you to meet the debt in a realistic time frame. If there’s a possibility you may need a little extra time, like four months instead of three, ask for the longer time frame first because you can always pay it back early, but likely won’t have a second chance for repayment.

You have a few options available:

  • A hardship plan (lesser or no payments for a specific period of time)
  • Reduced or eliminated fees and interest
  • Paying interest only on the debt until you can resume making monthly payments
  • A settlement (a lump sum payment that is less than the balance due)

It’s important to also know what can happen if you aren’t able to pay. If you have a secured debt, the collateral you used (i.e. a house or car) may be repossessed. If you have unsecured debt, like a credit card or medical bill, you can be sued for the money owed. 

Next, Explain Your Situation

No matter the reason, it’s always best to be truthful. Explain why you aren’t able to repay the debt, and do so calmly and clearly. You can even write down what you’d like to say in advance so you don’t forget anything. In fact, keeping track of your conversations, who you spoke with, when you spoke to them, and what they said will be one of the most beneficial things you can do.

Remember, It Never Hurts To Ask For More

If a creditor makes an offer to settle on a debt, don’t hesitate to ask for a further reduction. It never hurts to try.

When In Doubt, Write It Out

Corresponding by mail lets the creditor know you are serious and allows you to say what you want without getting flustered. It also provides proof of communication. Having hard copies of your letters can be a great asset if the circumstances become dire and you have to go to court. Make sure your letters include:

  • Your contact information and account number
  • A specific person or department’s address and name
  • A detailed explanation of your situation and circumstances
  • The solution you’re proposing
  • Any documentation related to your situation, like unemployment or medical papers

If you don’t hear back, continue providing updates in writing. Not only does it put you in control, it also shows you’re continually working to resolve the situation.

Lastly, Take Control

The Fair Debt Collection Practices Act regulates third party collector’s collection practices. Become familiar with what they are legally able to say and do so you enforce your legal rights.

If you’re looking for more helpful financial tips and tools to better plan, spend, save, and borrow, check out PlanU by UFCU. You’ll find options from talking with a financial health expert to creating a personalized resource center to meet your needs.

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