If you find yourself in the financial position of owing more than your assets or having more monthly bills to pay than your income permits, then it is clear that borrowing has gotten out of hand. If you do not have money to pay when a debt is due, you should communicate with the creditor to work out a solution. It is your responsibility to take the initiative. Be open and honest with the creditor and most will work with you.

Don’t wait for your creditors to come to you if you are going to miss a payment or you have run short of cash. Be up front about it and get them on the telephone! Don’t wait for collection agencies to call. Get them on the phone as soon as you realize you can’t make a payment on time. Be honest about the situation and what you can afford to pay each month.

Most creditors will try to help you work it out. The first message from a collection agency may say you must pay in full immediately. Don’t give up. This is what they are trained to tell you. Keep trying. Lenders are not stupid. They would rather extend your loan term or reduce your payments than receive nothing at all. If you are a slow payer, this will show up in your credit file, but there is some flexibility between full payment and complete default.

Your thoughts on this subject? Your comments appreciated!

Content © Rich Brott, 2011

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