By Paul Richard - ICFE Executive Director
The basic rules when dealing with creditors:
1. Be honest. If you've overspent, lost your job, etc., say so.
2. Be humble. Give up the charge or credit cards and return them Make
an attempt to send small payments ($10-$15) and show your concern.
3. Be in touch. Make early contact and keep them informed
Creditors are eager to work with people who admit they are in trouble
and need some help working things out. They express their greatest
concern, however, over those delinquent customers who don't stay in
touch. You'll find it easier to gain extensions by approaching the
creditor first, before the late payments hit. By contacting the
creditors first, it demonstrates you care about your financial
The moment you become aware income will be reduced, begin to develop a
plan to contact those creditors who'll be affected. First contact should
be by phone, since most have 800 numbers, followed by a letter
confirming your phone conversation. As you continue to convey to
creditors from time to time that you are succeeding in your plan to
reduce outgo and increase income to cover all obligations, most will
give you the time needed to meet the obligation, while at the same time
encouraging you to meet it in the very shortest time possible.
The skilled professionals in collections are honest, sincere and above
all realistic. They have heard every excuse imaginable and believe very
little. They also have, however, a sixth sense that helps them determine
a debtors sincerity in repaying a debt or obligation.
Attitude is important. If necessary, swallow the pride and acknowledge,
up until now, your poor handling of finances. Stress also that you are
approaching your finances differently now. If you are using the
Institute of Consumer Financial Education's "Money Instruction Book" or
enrolled in an Institute of Consumer Financial Education classes,
explain this to the creditor and how it is helping you get on top of
your financial situation.
Don't make payment commitments you cannot honor.
Do not tell a collector "what they want to hear", just to get them off
the phone. Remember also, in addition to getting your financial
situation in balance, your other goal is to keep your credit record from
hurtful bruises as a result of this temporary indebtedness. Collection
agencies also report to credit reporting agencies once an account has
been turned over to them. Your cooperation with them will make a
difference in what, if anything they report to credit reporting firms.