Any creditor struggling with their payments can contact their creditor to attempt to make an agreement to adjust their payments (except for mortgage debt except under extreme circumstances).
Before you contact your creditors you should work out a budget that shows your creditors how much funds you actually have available so you can make a fair agreement if possible.
Generally, your creditors will try to work with you to negotiate a fair agreement because they would like to recover the funds they have loaned you, however, your creditors are under no obligation to work with you or accept any agreement if they choose not to.
If your creditors agree to making an arrangement with you then they may withdraw their support at any time.
What are the Benefits of Contacting My Creditors?
By contacting your creditors you can attempt to make an agreement with your creditors to:
Lower your minimum monthly payment(s) by spreading your payments over a longer period of time;
Reduce your interest rates so your payments are lower each month and you can save substantially on interest charges;
Defer some payments to a later date;
Reduce your total debt owed by offering a bulk sum cash payment at a fair percentage of the debt you owe.
If your creditors agree to your proposal or make a counter-offer that you accept then you must get the agreement recorded in writing.
The agreement must include the terms of the agreement included in writing. Your creditors might offer something in return like you must surrender your credit cards or agree to have your credit frozen for a period of time.
Voluntarily suspending your credit is a show of good faith and will also help you add more debt to your already high level of debt.
It will also help you stick to your budget when you don’t have the temptation of credit available for a period of time, during which you will learn to resist the temptation of using credit.
Do I Need To Contact All Of My Creditors?
No, not necessarily. If you feel that making a new arrangement with only one, or a few of your creditors can help you get back on track and your finances under control, then you do not need to contact your other creditors – just keep making the required payments in the original agreement.
You cannot make an agreement to change your mortgage payments although under severe financial hardship you might be able to receive a 6 month mortgage payment relief period, with the missed payments added onto the end of the mortgage payment schedule depending on your financial institution.
Contacting Your Creditors
You may work with a debt management program to contact your creditors although it is best to do it yourself for many reasons.
You’ll have to summon up your courage and start calling the necessary creditors.
Contacting your creditors yourself allows you to show your commitment to resolving the issue and you can explain your budget to them.