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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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