Before Contacting Your Creditors

Before you contact your creditors, determine:

• How much you owe each creditor
• How much you can pay each creditor, which you should know after completing Step 2: Develop a Financial Recovery Plan
• When you can realistically pay each creditor if you are unable to make a current payment

If you can pay the creditor some amount of money, consider whether you want to negotiate:

• A reduced monthly payment for a period of time
• A loan refinance to reduce the interest rate and lower your monthly payments
• A payment deferment if you will have regular income or can make regular payments in the next few months
• Reduced or dropped late charges while you are facing financial difficulties
• Interest only payments until you can make regular monthly payments

Keep in mind these options may require you to make payments for a longer period of time and incur additional finance charges. Yet, you may be able to avoid collections and further damage to your credit.

If you cannot pay your creditors:

• Be prepared to explain in detail why you cannot pay them and/or why you have fallen behind on past payments.
• Explain any efforts you are making (e.g., increasing income, decreasing expenses) in order to pay them.
• Have a plan of when you can realistically pay them and how much you can pay them.
• Understand that the creditor may turn your account over to a collection agency if your payments are more than 90 days late. The company may also take legal action against you for the unpaid debt as stated in the sales contract or loan agreement.

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors other than your creditor cannot:

• Contact you at any unusual time or place
• Contact you at work if you have informed them not to call you there
• Use threats of violence or other criminal means to harm you or your property
• Call you with the intent to annoy, abuse, or harass you
• Call you without identifying themselves
• Use deceptive or misleading methods to collect debt

If you feel you are being harassed or treated unfairly by creditors, make sure you know your rights.  Learn more from the FTC website at www.ftc.gov. Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the FTC (www.ftc.gov).