If you are late on your payment you should be involved in arranging debt repayments with creditors. Taking control of your finances is a crucial element to running a household. Deal directly with your creditors.
When you see creditors more like ‘partners’ in getting out of your mess instead of being an aggravating reminder of your mess, things will have a better chance of working out. Together you can build the right repayment plan and schedule for your situation. You’ll know how much you can comfortably afford to pay and proceed to lay out a plan that will see you to the finish of that goal.
If you have not been placed into the ‘arrearages’ column then keeping up with your contract payments is a must do. Should your budget reach the point where you are no longer to maintain those payments then a renegotiation process needs to take place to help you need their demands.
The Process of Repayment Negotiations
To start negotiations, you must contact all your creditors either by email, letter, or phone. Explain your situation to them in detail. You will be surprised at how eager they are to help you and not be unfair with you. After all, it’s in their best interest to get the money paid as well. If you deal honestly and upfront with them, they will help you to work out a plan that works for both parties based on your special circumstances.
After negotiations your creditors will know the true reasons you are struggling and that you’re not simply dodging them or trying to avoid paying. They will be interested in helping you to budget your money and be successful in your dealings with them.
NOTE: Never let any creditor pressure you into agreeing to payment you are unable to make. While many creditors will be willing to work with you that sadly doesn’t apply to ALL creditors.
How Much of My Budget Should be Offered to Creditors?
To calculate the amount, you must pay to creditors you need to count the money left over after paying unsecured debt. Unsecured debts come in the form of personal loans, store cards, overdrafts, credit cards, etc. The way the ‘how much paid’ amounts are calculated in most cases is by negotiating a percentage amount you can offer for each individual creditor on each individual case.
What if They Will Not Agree With my Offer?
If your budget room is non-flexible and any adjustments would be purely unrealistic you may look deeper into your money-management abilities. If you cannot make the payments, they want with your current budget approach, take a hard look into your spending. You may be able to cut back in the area of spending to have more left over to offer to your creditors. This really shows that you are doing your best to get caught up.
There are always areas where people spend more than they necessary. Naturally, there will be a limit to what you can cut down on. You never want to cut down so far that it’s no longer practices for you to live that way. This is an area where your negotiating skills to get the best deal with your creditors really count.
You should lower your spending wherever it is possible. If it’s not possible, you SHOULD NOT agree to make payments that you will have trouble making. If you have any doubts about your repayment schedule at all you have contracted for misery. Again, some creditors are very willing to help and have the experience and know-how to look at a person’s budget and see places that could be adjusted. Let them.
Does my Credit Rating Affect the Repayment to my Creditors?
If you wind up paying a lesser amount than your required monthly payment if DOES affect your credit rating. That means obtaining further credit takes a nosedive. It is normal procedure for creditors to try and bring their accounts up to date. Eventually your account will go into default and the contract is broken.
When this happens, you will not be able to use that amount any more regardless of its source (credit card, store card, overdraft). If you have a personal loan you won’t be able to get further credit until that loan has been paid in full.
There is only ONE WAY to avoid having a poor credit rating – Pay ALL BILLS DUE in full and on time. Always be aware of how crucial your credit score is to run and maintaining a home in today’s modern financial system. Always take the time to carefully think out the possible consequences of borrowing money and how import