Aug 23

Most people exert at least some effort trying to maintain a good credit rating. When things turn sour financially, though, the way is open to creating credit problems. Severe credit problems are not inevitable, though, even if a major event occurs such as a job loss, large medical bills, or disability.

I do wish I had known some of the things I’m sharing with you a lot sooner. Still, even learning about how to approach creditors “too late” will improve anyone’s situation.

First, we need to all be aware that you can’t be locked up for bad debts. The exception, of course, is debt that happens fraudulently, but that’s not how a majority of problems occur, and it probably has nothing to do with your problems either.

Secondly, each of us needs to objectively view our financial position and determine which of the piles of “things” we tend to accumulate are things we really don’t need in order to live a meaningful and comfortable life. In other words, we need to realistically appraise the home we live in, the car(s) we drive, our choices for entertainment, and even how we go about getting food into our faces. Perhaps giving up some things and taking up a more meaningful and less expensive choice or choices would be wise.

Thirdly, we need to find ways to communicate with creditors so we don’t wind up deluged with phone calls that can get so bad we can be afraid to pick up the phone. For example, if we keep in touch with our creditors it may make them more willing to stop calling every day. If they refuse to stop calling every day because of some sort of “policy” in their office, there is still steps that can be taken:

  1. Write a letter to each creditor, and send it by postal mail. In that letter, ask the creditor to refrain from calling you on the phone and to instead communicate only by postal mail. You can find a sample letter for this purpose here.
  2. Send each creditor a second letter, confirming your debt and offering a payment plan you an actually afford. Most creditors employ people to call you up on the phone who don’t have the authority to make arrangements below a certain level. By sending a letter with an offer you can actually afford, however small it is, you have a better chance of making an affordable agreement with them. You can find a sample letter for this purpose here.
  3. Once you have agreements in place, keep to those agreements.

Gaining a position of control in your dealings with creditors will ensure that you sleep better. Having your wits about you means you’ll be able to perform your job better, reduce strain on your family relationships, and give you a sense that no matter what any creditor thinks of you, you are doing all you can to responsibly resolve your debt problems.

Aug 18

Steve and I have been going through a lot of the same problems that many others are going through right now. We have a large mortgage balance, credit card debt, owe money on our vehicles, and in general are feeling a pretty big pinch in the pocketbook. One of the biggest things I’ve been concerned about is the mortgage situation. I don’t want to be one of the casualties of the foreclosure explosion, and we’re in danger of becoming just such a casualty by virtue of the larger-than-expected interest payments coupled with the decline in our home’s appraised value.

Not that I’m trying to bellyache about our situation. We realize that our situation is the same for many others in this country right now, and we are no worse off than so many others. Still, we want to learn about what we can do if or when the time arrives.

There are a number of things an individual can do, and I’ve been doing some homework on it for our own sakes as well as to share. Briefly, the advice I’ve been reading indicates that executing a plan to pay down debt is the best way to gain some breathing room and reduce the fear over the mounting debts so many of us have. I’ll be sharing what I’ve been reading — as well as links to lots more information on the topic — in the next several blog posts.