Written by Paul Richard - ICFE Executive Director
The basic rules when dealing with creditors:
1. Be honest. If you've overspent, lost your job, etc., say so.
2. Be humble. Give up the charge or credit cards and return them Make an attempt to send small payments ($10-$15) and show your concern.
3. Be in touch. Make early contact and keep them informed periodically.
Creditors are eager to work with people who admit they are in trouble and need some help working things out. They express their greatest concern, however, over those delinquent customers who don't stay in touch. You'll find it easier to gain extensions by approaching the creditor first, before the late payments hit. By contacting the creditors first, it demonstrates you care about your financial obligations.
The moment you become aware income will be reduced, begin to develop a plan to contact those creditors who'll be affected. First contact should be by phone, since most have 800 numbers, followed by a letter confirming your phone conversation. As you continue to convey to creditors from time to time that you are succeeding in your plan to reduce outgo and increase income to cover all obligations, most will give you the time needed to meet the obligation, while at the same time encouraging you to meet it in the very shortest time possible.
The skilled professionals in collections are honest, sincere and above all realistic. They have heard every excuse imaginable and believe very little. They also have, however, a sixth sense that helps them determine a debtors sincerity in repaying a debt or obligation.
Attitude is important. If necessary, swallow the pride and acknowledge, up until now, your poor handling of finances. Stress also that you are approaching your finances differently now. If you are using the Institute of Consumer Financial Education's "Money Instruction Book" or enrolled in an Institute of Consumer Financial Education classes, explain this to the creditor and how it is helping you get on top of your financial situation.
Don't make payment commitments you cannot honor.
Do not tell a collector "what they want to hear", just to get them off the phone. Remember also, in addition to getting your financial situation in balance, your other goal is to keep your credit record from hurtful bruises as a result of this temporary indebtedness. Collection agencies also report to credit reporting agencies once an account has been turned over to them. Your cooperation with them will make a difference in what, if anything they report to credit reporting firms.