During tight economic times, paying your monthly bills may become an insurmountable challenge. Instead of defaulting on your commitments, take a proactive stance and avoid costly financial mistakes. Contact your creditors and obtain deferments on your bills. Creditors are usually willing to revise your payment schedule if you communicate with them in a timely and effective manner. Use the extra time allowed by deferments to get your finances in order so you can protect your credit.
Crunch your numbers to determine your monthly shortfall. Add every source of income together to calculate your total income. Add all bills and living costs to calculate your total expenses. Subtract your expenses from your income to determine how much money you will be short.
Determine which creditors you will approach to request deferments. Issuers of loans -- including student loans and mortgages -- as well as those to whom you owe tax payments and utilities are among those creditors likely to work with consumers experiencing financial difficulties.
Collect your most recent three or four statements from the creditors you will approach for deferments. Gather your most recent earnings information showing your year-to-date wages, along with your most recent tax return and your bank account information.
Write a thorough explanation of your financial situation. For example, if you are an unemployed student and your spouse experienced a lay-off, provide these details.
Call the creditors from whom you need a deferment and ask to speak with an account representative. Explain your circumstances, using your written explanation to ensure that you don’t miss any important details. Tell the account representative that you have gathered your earnings information, your most recent tax return and your bank account information to depict and explain your financial circumstances. Be ready to furnish copies of these documents to the creditor upon request.
Ask for a temporary reduction in your existing payments for a specific period or ask for a complete suspension of payments for a specific period. Understand that you will have to repay this reduction or suspension to bring your account back up to a current status -- either in a lump sum or with additional payments added to the term of a loan. The creditors will probably send you applications or other paperwork to fill out in order to complete the deferment request. Return the completed paperwork as quickly as possible.
Stay in contact with the creditors during the deferment period. If your financial situation improves, end the deferment earlier than the agreed-upon time. If your financial situation worsens, continued communication demonstrates your concern and desire to be responsible for your bills or financial commitments.
- Interest on loans will continue to accrue even during deferment. If you can afford it, strive to make interest payments during a deferment period to lessen your overall financial burden.
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