We know that things like the economy, your employment or other personal situations can cause financial hardships.
Here are a few things to consider when you can’t make your payments:
Know Who To Pay.
If you can’t pay everyone, you need to prioritize your debts. Some bills are more important than others. Things like your mortgage or rent, utilities and your car may be higher on your priority list.
Call your creditors when you know you can’t make a payment. Explain your situation in full. Offer to pay as much as you can to show that you are serious about repayment. Remember that your creditor has no obligation to accept anything less than what you have agreed to pay; however, sometimes they can work with you. For student loans, you may be able to negotiate a deferral or forbearance.
Have Realistic Expectations.
Be aware that, your creditors will attempt to collect payments on your legally-obligated payments to them. In most cases, you will be charged fees for late or missed payments. You also will be reported to credit agencies, which can affect your credit standing and loan interest rates for years. Failure to pay secured loans, like a car loan, may result in repossession. Lenders can take your car if you do not make your payments and have not made arrangements to reduce or defer payments.
There are also potential legal ramifications of not paying your debts. You may be taken to court, your wages may be garnished to secure payment and money may be withdrawn from any checking or savings accounts in your name in accordance with contract terms.
If you need help, don’t wait. Reach out to a free non-profit credit counseling agency. Their staff can help you create a budget, get back on track and, in some circumstances, even negotiate with your creditors. You should not pay an outside agency for this service.
It’s important to take control of your obligations and finances. Maintaining your credit rating and payment history in good order will broaden your loan choices and reduce your loan costs in the future.