Feature by Town & Country Federal Credit Union
As you rebuild your financial life in recovery, figuring out how to pay off debt can be stressful. And if you are receiving phone calls or letters in the mail from creditors or debt collectors, chances are that is adding to your financial stress.
One thing is for certain, you don’t want to ignore a creditor. They will continue to contact you until a debt is paid. Ignoring a creditor for a debt you owe can cause further damage to your credit score and report. There is a way out of this, but it will likely take some time. Take a breathe and make a plan to pay off your debts and address communications from creditors and debt collectors.
Here are 10 tips to help you get a handle on your debt and work with creditors.
1. Start by updating your budget and creating a spending plan that includes making debt payments.
2. Prioritize the people and organizations you owe and determine what you can pay each month. You may not be able to tackle them all at once.
3. If you are contacted by a debt collection agency, be sure to verify that the debt is indeed yours. Get in writing who the original creditor is and how much you owe.
4. Be proactive and reach out to creditors to discuss creating a workable payment arrangement. Have a repayment proposal for your outstanding debt. Be realistic with what you can afford to pay towards each debt and don’t over commit.
5. Feel free to make a counteroffer to a creditor’s proposed payment request if you know it is not going to work for you. Most collectors are open to negotiation and setting up workable payment arrangements.
6. In some situations, it may be beneficial to settle a debt like when an account is already delinquent and has damaged the credit report. See if the debt collector will settle for a portion of the cost if you pay upfront.
7. If you have medical debt, you may be able to negotiate interest-free payments with the provider directly. Contact the billing office to see if there are any programs you qualify for that can eliminate or reduce the balance.
8. If you are having trouble paying your student loans, contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that lowers your monthly payment. You can ask about options for a deferment, forbearance, or loan consolidation.
9. Communicate calmly without making impossible promises. Let them know you will repay your debt as quickly as your financial situation will allow.
10. Do what you say you will do. Be sure to make all your promised payments consistently and on time.
At Town & Country Federal Credit Union we believe everyone deserves a second chance. If you would like to talk with someone about creating a budget or debt repayment plan or have other financial questions, contact us at info@tcfcu.com, or call 800.649.3495.
