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Surviving Divorce & Separation: Ways to Save Money: Alternative to Bankruptcy:
Make the call: Call each creditor. Introduce yourself by name and account number.
Get down to business: Explain that you are prepared to discuss a payment plan for your debt. Briefly explain why you are in debt. Make it clear that you are calling them before they call you, as a sign of your intention to handle your financial responsibility. Advise the creditor of your current action plan to increase your income and reduce your expenses.
Ask for help: "H-E-L-P" is not a bad four-letter word. It tells creditors you trust and respect their expertise. Ask that they work out a payment arrangement that is realistic for you and satisfies their needs.
Prepare to negotiate: They might balk at your first proposal or offer a deal of their own. If you can't meet the agreement, then don't agree to it. Agree only to what you can fulfill, or you just complicate matters more. You'll lose confidence in yourself and your creditors won't believe your next promise and will be less likely to work with you.
Strive for peaceful coexistence: Get an agreement you can both live with and be sure you both understand it clearly. Get the person's full name. Verify the mailing address, which is usually different than the one on your monthly statements. Follow up the call immediately, while it is still fresh in your mind, with a letter that states your understanding of this new verbal contract.
Make three copies: One you keep, one you send by registered mail for them to keep, along with the third for them to sign and return to you. Your creditor will respect you and deal with you accordingly.
Reality Check
Jon was a week away from closing on a $75,000 home mortgage, when he decided to buy a new car. Two days before closing on the house, his lender ran another credit check and discovered the newly-added debt (a $285/ month car payment). That tipped the scales on Jon's debt-to-income ratios, and the lender backed out of the mortgage. Lesson: If you are waiting to close on a mortgage, wait until it is completely signed, sealed and delivered before you make a major purchase on credit or tap into your savings accounts or investments. If you go on a shopping spree, a last-minute credit check prior to closing could signal trouble.
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