Dealing with Creditors

With recently released figures indicating that the use of credit facilities in Australia has increased, more and more people are receiving calls from their creditors regarding payments. This can be attributed to a number of factors such as recent unemployment, lack of work over holiday period or reduction in income.

It is important that you speak with your creditors when something occurs that results in you struggling to make the payments on your debts.

You do not want to wait for your creditors to start contacting you because once they start chances are that they may not stop.

If you take the time to notify your creditors of a change in your circumstances you are likely to be surprised at their response. With the majority of credit companies now moving towards a gentler response to collection due to recent bad press, this change has made it easier for clients of banks to apply for hardship and although this may not be a long term solution.

The reduction in payments for a short period of time is all some people require. At Debt Negotiators our consultants have been dealing with creditors for the majority of their careers in the financial industry and with these past experiences have structured the following steps to make dealing with creditors simpler for everyone.

If you have been receiving harassing calls from your creditors, it is in your best interest to take action, you are best not to just ignore the calls as this will cause you to be in more financial difficulty.

Dealing with creditors - Two men looking at laptop

Step 1: Figure out who you have debts with

It may seem simple and the most obvious step but in some cases people have so much debt that they do not know who or what company they owe money to. In this situation, possibly obtaining a credit file from credit reporting agencies such as Veda Advantage will assist in finding where your debt might be. With current statements and you’re your credit file in hand, this will enable you to have a clear picture where you financial situations is.

Step 2: Calculate total debt level and minimum payments

You now know who you owe money to; you must now add all the debts together to allow you to work out your total debt level. This step will give you a clearer understanding off exactly where you are in terms of your financial situation.

Once you have worked out who you owe money to calculate how much you are required to pay each of them and add these amounts together. This will allow you to see how much you are expected to pay each month to keep yourself up to date on your total debt level.

Step 3: Formulate a budget

To allow you to go back to your creditors you will need to know how much you can afford to pay them. To work this out you will need to formulate an affordable budget. Remember when calculating your budget to include all of your expected income and expenses and turn these figures into monthly amounts.

Making these amounts monthly will make it much easier for you when you go back to your creditors. When calculating your budget does not include your payments to the debts, this will allow you to see how much money you will have to offer your creditors.

Step 4: Calculate if you have enough money to pay the required amount to your creditors

You now know how much your creditors want as a repayment and also how much money you have left over after your expenses. What you now need to work out is if you can afford what your creditors want from you. This is done by subtracting the payments from you left over income. If this amount is a minus it means that you cannot afford what they want you to pay. If it is a positive you are able to afford what they want.

Step 5: Contact your creditors

You now know either way if you can afford to pay your creditors what they want or if you will need to negotiate with them. The next step is to contact your creditors. It is important when contacting them not to allow yourself to get flustered by what they say.

You need to be courteous and explain your situation in detail. If you are able to afford what the creditors are asking for but have missed a couple of payments, explain what has happened and advise them that you will be making a payment as soon as possible.

If you cannot afford to make the payments they are requesting it is best to offer them an amount you can afford and if they are unwilling to accept the offer, you might be best to speak with someone who has a proven track record of dealing with creditors and making affordable payment arrangements.

These steps may assist you with stopping these calls if they don’t and the creditors are not willing to listen to your offer, it is in your best interest to speak with someone. If you believe that your creditors are harassing you, speak with the banking ombudsman this will help you.

At Debt Negotiators our consultants have experience in dealing with all financial matters, so if you are struggling call us on 1300 351 008.


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