If you are close to falling behind on credit card payments, your mortgage, your car loan or any other debt, you are not alone. In a 2017 poll from Amino, 37 percent of Americans said they would go into debt if faced with a medical bill of $100 or more.
It is easy to panic and wonder what you will do when faced with a situation that you don’t have an answer to. There are ways to handle your financial situation that will make your life easier in the long term.
Check out these easy steps to freedom.
Step 1: Don’t Wait
If you are going to miss even one payment for a debt that you owe, call the company and let them know what is happening. It is easy to think that the lender does not care and will not accommodate you, but with the current pandemic situation, many companies are offering hardship types of programs that they often call “accommodations”.
The only way to get into a hardship program is to ask. Start with these questions and don’t be afraid to ask whatever questions you need answers to.
- Do you have accommodations or hardship programs for people struggling with finances because of the pandemic?
What will happen to my credit reports if I accept your new terms?
What will my new interest rate be?
At the end of my new loan period, will I have paid more overall?
Will this affect my credit limit?
What if I can’t keep up with the new terms?
Step 2: Consider The Solutions Offered
Sometimes, the company’s program allows you to delay your payments for a temporary time period. Other times, they may allow you to pay less than you owe for a time. Many larger companies such as hospitals handle bad debt from consumers often.
Hospitals and larger non-profit type companies often have programs that allow you to structure your debt repayment over time with a low interest rate.
Step 3: Get a Copy of the Agreement
Always ask your lender for a copy of your new agreement so that you have proof of your new negotiation. Also make sure to ask if they are reporting anything to the credit reporting companies Equifax, TransUnion, and Experian. You want to make sure that they are not reporting your debt as “settled” or as “bad debt”.
If you aren’t sure of what they are reporting and are not getting the answers you need, you can get a free complete report from each of the credit reporting agencies one time per year at annualcreditreport.com
Step 4: Customer Service Solutions
The key to finding a solution is to talk to your company. Call repeatedly until you are sure that you have exhausted all of their options for you. Sometimes you may get a less than helpful representative. Other times, you may talk with someone who is eager and able to help. Remember that the squeaky wheel gets the grease.
Always be polite but firm in your resolve to find a solution. Customer service and billing representatives will often respond to polite but repetitive requests for help just to close your case out.
According to ConsumerFinance.gov, “Many lenders are facing high call volumes because of the pandemic, so the wait time may be long. You can also check your lender’s website to see if they have information that can help you, ways to communicate electronically, or online applications for hardship programs or accommodations.
When contacting your lenders, be prepared to discuss your financial and employment situation, as well as how much you can afford to pay considering your income, expenses, and assets.”
Step 5: The Lender’s Bad Debt Perspective
On average, companies write off 1.5% of their receivables as bad debt. This means that the company knows they will never be paid for 1.5% of what is owed to them from consumers. They just accept that as the price of doing business.
Still, a company would rather work with you than write your debt off as bad or sell your debt and lose some of their profits.
Step 6: Debt Collection Agencies are a Whole Other Animal
Once your lender sells your debt to a collection agency, these agencies aggressively use tactics to collect the debt. They get paid when you pay them. A portion of what they collect goes to the original lender.
The Federal Government passed the Fair Debt Collection Practices Act, the FDCPA, that makes it illegal for debt collection agencies to:
- Use abusive, unfair, or deceptive practices when they collect debts
- Call at unreasonable hours unless you invite them to call at other hours
- Call your workplace after you ask them not to
- Threaten to sue you unless they are actually planning to sue
- Use foul language or threaten you in any way
Step 7: Get Help
If you feel like a credit agency or lender is treating you unfairly and causing further harm to your financial situation, reach out to a knowledgeable and experienced attorney specializing in Consumer Rights. It is not legal for lenders or creditors to use abusive language or make threats against you.
The right counselor can help you get legal recourse for the hurtful actions of a company that only cares about the bottom line.