Handling debt can mean handling stress. You receive letters and phone calls from creditors (sometimes at work) and it can be hard to see the light at the end of the tunnel.
So it may seem like a quagmire; a situation that doesn’t have a solution. However, your creditors just want their money back. So, in a way, you have a little bit of leverage here. In this brief guide, you will find tips and advice on how to maintain a somewhat cordial rapport with your creditor or just keep the pesky calls at bay.
Step 1. Create a budget
It is very important to determine out where you stand financially. Take some time out, sit down and write a list of your expenses per month. How much you earn and where it ends up going. This information will provide you a kind of formula to follow while paying your debts off. Priority remains on which bill has to be paid first. By creating a budget, you can create a little extra money and accelerate the speed of paying your debt off.
Step 2. Don’t ignore creditor calls.
It’s understandable: You’re sick of hearing from them, you’re working on fixing a solution to pay it off, so what more could they possibly want? The problem is: If you keep ignoring your creditor’s call, chances are he/she will think you are dodging them. They will assume that you are in no mood to pay your debt off and may conclude that the best thing to do is take action against you.
So you need to be honest and upfront about it. A polite “I request some time to pay the debt off” can sometimes be productive. Suggesting an alternative repayment plan which is affordable to you may be acceptable to your creditor. It is important, however to always remain polite and treat them with respect.
Step 3. Any payment is better than no payment
Even if you can only afford a tiny payment of, say $5. It is always better than nothing and can express more powerfully than words that you intend to fulfill your obligations. Keep the payments regular and follow it up with your written intention to repay your debts.
Step 4. Never let them treat you shabbily
Some creditors can be a bit pushier than others. A good way to handle them is to maintain a dignified, firm stance. Let them know that while you’re aware of your obligations that you intend to pay them back. It does not give them to right to treat you in an inferior manner.
Step 5. Get it in black and white
Spoken words can be worth the paper their not written on. A written agreement is always more powerful. You need evidence. Map out your terms, and send in your negotiation in written form. This helps you by protecting your plan. Once they agree, ask them to sign it and return it to you so that you have proof. Remain firm and civil in this request. It is mandatory if you wish to keep the procedure less messy.
Step 6. While dealing with collection agencies, ask for NMD (Negative Mark Deletion)
Matters can get worse if you fail to pay the collection agencies. They may report this failure to the credit bureaus which negatively affects your credit rating. To avoid this, you need to each mark to be deleted in its entirety. For this to occur you have to pay your debt completely.
Step 7. Get done with the High Interest debts first
If you have the choice between paying between two credit cards, pay off the highest interest card first. The extra money can be used to accelerate the repayments of your other debts. If you have one card with a tiny balance, consider paying that off entirely as that can have a positive effect on your credit rating.
Step 8. Request the removal of fees
If negotiated effectively, you can actually ask your creditor to remove non-payment penalties, fines and other late fees. This may seem unlikely but remember: It’s possible if you’ve maintained a decent contact with your creditor. Negotiation is very important in this regard.
Step 9. Ask for more helpful rates
You might want to ask to be considered for a lower interest rate or a larger credit limit. A good payment history helps a lot in this case. Tell them how you’ve remained diligent in paying your debt off in time so a decrement in the interest rate would be highly helpful. Chances are they will listen.