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Dreaded Ds, Part 2
Restructure the Terms of Your Payment
Some credit card companies and banks will say, OK, if you can't pay for two or three months right now, we'll let you forgo those payments in the short term and will add those payments to the back end of your loan in order to help you come current and get back on track. Of course, these businesses aren't doing this out of the kindness of their hearts. They do not want you to go into foreclosure. They do not want you to be delinquent in your mortgage payments. They do not want you to wind up in bankruptcy court, because that is not financially advantageous for them because they risk getting nothing. That's why they've designed programs to assist you to through tough times.
By tacking on payments on the back end, or deferring payments, interest still accrues in many cases, but at least your credit card company or mortgage lender allows you to preserve your credit rating and not get dinged with 30-, 60- or 90-day past due payments. Those are credit killers in the long run and can hurt you for many years to come.
Revise Your Credit Card Due Dates
You can also ask your creditors to change the due dates on your accounts. Why would want to do this? Well, this is a negotiation that really helps you to deal with cash flow issues. Some of you may have all your bills coming due around the first or the tenth of the month. Well, you can call up your creditors and say, "Can you switch the due date on my account from the first of the month to the 20th?" The point of you doing this is that you're going to be able to spread out your payments to meet your own unique cash flow situation, so all your bills won't come due around the same exact time.
Begin Settlement Negotiations with a Lowball Offer
If you have past due accounts that are significantly overdue, and you're now ready to settle up and pay off those accounts, don't hesitate to start with a low offer. Call up your creditor and start negotiating by offering no more than 50 cents on the dollar—particularly if it's your first round of negotiation, and especially if it is an old account.
In many cases, the creditor will have already written off the account, meaning they've already taken a tax loss from on the account. And because they have not seen or heard from you in whatever amount of time, it's a bonus (in their eyes) for them to get a call from you. So for them to get some money is better than getting no money at all. Also, if you are serious about rebuilding your credit, you only want to pay those institutions, lenders, and organizations that agree to delete all negative information from your credit report in exchange for your payments. That should be high on your priority list.
If they can't agree to that condition, I would suggest moving on to the next account and negotiating with the next creditor. The strategy is to concentrate on paying off those old debts that you can get removed from your credit report entirely.
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How EdFed Helped others!
EdFed helped me out a lot! My student loan balance was not as high as most of my friends, so I didn't even know if consolidating would be worth my time. The loan counselors at EdFed really explained the benefits of consolidating and took the time to do a comparison of my total loan costs with and without consolidating. Even though my loan balance was not large, my monthly payments were reduced by almost 50% through my EdFed loan consolidation! This provided a lot of relief. Now, I know I can make my student loan payments, and I still have plenty of money to do the things I want to. Thank you, EdFed, for walking me through this process. - Rochelle G. Chicago, IL
Student Loan Consolidation Info - How to Choose the Right Loan Company
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