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Debt problems - How to deal with creditors
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When you are knee-deep in debt and your creditors call you often, it is important to answer or return their calls in a courteous or professional manner. Remember, there is no fun in burning bridges with your creditors. They can report debt activities to your credit report. However, if you are calm and confident in dealing with them and show an inclination that you are willing to do whatever it takes to pay off debt, they will be ready to work with you. If you behave aggressively, you will create more problems for yourself in the future. If you are having debt problems, consider a debt consolidation loan and you will be on your way to financial freedom.
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Debt problems - How to deal with creditors
However far you are along the road of financial/debt problems, the same principles apply to dealing with your creditors.
However rude, intrusive, threatening the correspondence/telephone calls FROM your creditors, your correspondence/phone calls TO your creditors must be:
* Calm
* Brief
* Factual
* Relevant
* To the point
You must create the impression that you are efficient, knowledgeable and trustworthy. The person dealing with your correspondence is merely doing their job, which is acting on behalf of their employer -- to whom you probably owe money. This person probably has the opposite point of view from you, but it is not personal and you must not let it become so.
Just as you would, this individual will respond better to a person who appears to be calm, and believable, and know what they are doing.
How can you appear calm and believable, efficient, knowledgeable and trustworthy, when you possibly owe more than you can afford and have probably made past mistakes? The answer is that your past history is less important to the person dealing with your account than your present attitude and what that promises for the future.
That is not to say that what you have done in the past has no relevance, or that you can go on to make promises you don't keep - far from it. However, if you acknowledge your current problems, explain your past mistakes if required, and most important of all, do everything you say you will do from now on, you CAN improve your relationship and situation with your creditors.
If you react with anger, if you are agressive, if you fail to keep your promises, you will merely make your problems worse.
Be calm, be prepared, and make these all-important first steps work in your favour.
Look out for How To Get Rid Of Debt Problems Step 2, where we look at 'How To Prepare A Financial Statement'
Rob Hawkins is the owner of Debt Consolidation UK. His company Chiltern Debt Management UK has helped more than 50,000 people to get rid of debt problems, and won the coveted 'Debt Counsellor of the Year 2004' award. Read the full story here.
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Debt problems - How to prepare a financial statement
Here is how to prepare a financial statement, for the purpose of negotiating reduced payments with your creditors.
Secured/Unsecured debts. Before we get into the substance of this, let's ensure we are clear about the significance of secured debts.
If the debt is secured, there is a risk that the item upon which the debt is secured could be re-possessed, if payments are not maintained. One of the most common forms of secured debt is the mortgage -- which also typically represents a very large debt and therefore a potentially very large problem.
There are two important points to note concerning secured/unsecured debts and attempting to reduce payments.
1. any creditor who is owed a secured debt has no reason to accept reduced payment. The creditor, in nearly all cases, would rather re-possess the item upon which the debt is secured
2. The borrower must be aware that, in the case of a secured debt, any change in the agreed payments carries a risk that the item upon which the debt is secured could be re-possessed, unless the creditor agrees in advance to accept the change. Thus, in most cases, it is only unsecured debts which offer the chance of a potential reduction in payments.
Right, on to the financial statement.
The following are the items you should list, where applicable, in order to present your total income and expenditure. You should calculate and enter a monthly figure for these items.
You might like to copy and paste the following items into your Word Processor/Spreadsheet/Text Editor for printing out.
INCOME
Wages Salary (after all deductions)........................
Partners or second salary (after all deductions)...........
Benefits
Unemployment...............................................
Maternity..................................................
Sickness/Invalidity........................................
Child/One Parent...........................................
Retirement.................................................
Income Support.............................................
Family Credit..............................................
Contributions
Maintenance................................................
Lodger/Dependants..........................................
TOTAL........................................................
EXPENDITURE
Rent/Mortgage................................................
Rent/Mortgage Arrears........................................
Second Mortgage..............................................
Endowment/Mortgage Protection................................
Child Maintenance............................................
Life/House Insurance.........................................
Council Tax..................................................
Water Rates..................................................
Gas..........................................................
Electric.....................................................
Telephone....................................................
Clothing.....................................................
TV Licence/Rental...........................................
. School Meals.................................................
Meals at Work................................................
Car Tax/Insurance............................................
Travelling Expenses..........................................
Spending Money...............................................
Total .......................................................
You should ensure that this total expenditure figure is sufficient for your needs, and that no items of expenditure can be considered excessive. Obviously, total expenditure cannot be MORE than total income.
Your income figures will need to be proven by a copy of a recent payslip.
Look out for How To Get Rid Of Debt Problems Step 3, where we look at 'How To Negotiate Reduced Payments With Creditors'
Rob Hawkins is the owner of Debt Consolidation UK. His company Chiltern Debt Management UK has helped more than 50,000 people to get rid of debt problems, and won the coveted 'Debt Counsellor of the Year 2004' award.
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