10 tips for Borrowers who fail to make their monthly payments tend to get panicky. However, what you need to cope with such unfortunate turns of events is calmness. Follow these ten tips to make sure your communication with the lender is effective and allows to find a solution suitable for both parties.
Do not despair
When a borrower is signing their loan agreement, they are usually planning to fulfill their obligations as they must. However, emergencies may disrupt any plans, and bring chaos into our family budgets. Creditors are well aware of this, and there are ways to avoid conflict and the most drastic consequences.
Clarify your financial situation
Analyze the factors preventing you from making that regular payment. Is there a way to earn more money in the short term? Or does your predicament look like it will last a few months? You ought to evaluate rationally and draw conclusions that may be communicated to the lender.
Come up with a cash flow statement
This includes listing all of your monthly expenses and deducting the sum from your personal income. Decide which of your current obligations (if you have several loans) must be met first. As a rule, mortgage or car loan will be a priority. This is because creditors providing these types of financial assistance may confiscate your property without a trial.
Determine the timescale
It is essential to understand when you will be able to resume regular payments. Do not be overly optimistic. If you have been fired, you could manage to find a job in three months, but assume this will take five.
Analyze your budget and spending thoroughly. Are there any purchases you could live without?
How much is left?
It is always worse to ignore payment dates, rather than offer to pay a few dollars instead of the normal $100. Lenders are more understanding when they see you are still trying to repay the debt, even if you are currently unable to follow the agreement in terms of amounts.
Do not avoid communication
Ignoring phone calls is not an option. Lending institutions of any type would rather negotiate with you and formulate a customized solution, rather than sue. However, if you are deliberately avoiding contact, they will have no alternative.
Examine your opportunities
Think about ways to boost your income at the moment. Could you possibly get a part-time job? Are there any assets you could sell to cover the debt?
Write a script
As a conversation with your creditor is likely to make you nervous, prepare in advance. Write down your thoughts to structure them logically. The creditor should be informed of the factors behind your failure to pay, and your efforts to remedy the situation. Be brief, to the point, and suggest a possible solution.
Some institutions may waive certain fees or decrease their interest rates temporarily. Moreover, they could reduce the monthly amount for a certain period.