Ten Steps...What To Do When You Can't Pay Your Bills
Life is full of surprises, but bills don't seem to care. They keep rolling in,
even if you've lost your job, fallen ill, encountered unexpected household expenses...or
simply lived a bit above your means. Your financial crunch may be temporary, but
your credit record is enduring...and overdue bills can haunt you for years to
come.
What can you do if you're having difficulty paying your bills? Here are a few
suggestions:
| 1) |
Don't stick your head in the sand. No matter how
tempting, trying to ignore a mounting pile of bills is the worst thing you
could do. You'll end up with late fees, interest charges...and a ruined
credit rating. |
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| 2) |
Be wary of debt consolidation plans. While these
may be effective, the concept of borrowing money to clear up obligations
is not considered to be a generally sound approach. In many instances, it
simply pushes the problem a few months or years into the future. Remember,
you cannot borrow your way out of debt. |
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| 3) |
Complete a personal balance sheet to help pinpoint
your current situation in terms of assets and liabilities and help identify
possible steps you can take. You may want to use a simple note pad. However,
it is recommended that you obtain a pre-printed form, which will allow you
to record complete information. These are available from your local financial
institution or your insurance agent. |
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| 4) |
Make a separate list all of your bills and amounts you
owe each month. Include credit cards, rent or mortgage, electricity,
phone, car payments, college loans, insurance. |
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| 5) |
Develop a strategy for debt repayment. Calculate
how you could pay each bill on a revised schedule...perhaps paying smaller
amounts over a longer time period, or until your financial picture changes.
If your finances are out of control, contact a consumer credit counseling
agency. However, avoid "debt doctors," who often claim they can erase your
credit history for a fee. |
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| 6) |
Contact the people you owe. Remember, if they do
not know your situation, you could end up in court. So, with smaller, local
organizations that know you personably, pick up the phone and call. Explain
your situation and discuss options. The idea is to take the initiative by
presenting your plan for repayment. You may be pleasantly surprised at the
positive response. Creditors will appreciate your concern...and you'll be
more likely to receive revised terms designed for your personal financial
situation.
The same goes for dealing with larger, national creditors.
Call first and talk to someone in the customer service department. Stress
your interest in paying off the debt and ask about options. Remember,
most companies have no more desire to lose a customer than you do to avoid
your bills. The key is communication. Important: Be sure to get names
(first and last) of the people to whom you talk, as well as direct phone
numbers. Not only does this help you track them down again, but it also
helps build a relationship.
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| 7) |
Get all agreements in writing. A verbal okay to
debt restructuring is fine. But it still needs to be on record. Whether
dealing with a large or a small organization, a written agreement may be
all you have to prove that a revised repayment schedule was okayed. |
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| 8) |
Contact the credit bureau to verify that your record
remains clean and that it contains no blots. Also, you have the right to
add a statement to your credit record explaining any discrepancies or disputes.
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| 9) |
Don't let your insurance policies lapse. Your medical
insurance and homeowner's coverage provides valuable protection. The same
goes for your life insurance. If you are having difficulty paying your premiums,
contact your agent to discuss the options available. |
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| 10) |
Only declare bankruptcy as a last resort. Last year,
a record 1.3 million American consumers and businesses declared bankruptcy.
But that doesn't mean it should be considered an easy alternative to paying
bills. Under bankruptcy laws, debts do not miraculously disappear without
penalty. Bankruptcy will remain on your credit record for ten years. Avoid
it if you can. |
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Source: http://www.newyorklife.com/
