Debt Payments with Creditors: Self-managed Debt Solution

For an individual in combat to repay each month’s bills and secure debt payments, the pressure can be breath-taking. Your debt continues to thrive because of your rising expenses.

Options to arrange your debts with creditors

While there are are several ways to settle your debts, such as filing for bankruptcy or applying for a DRO, you can also settle your debt by arranging repayment with your creditors. This is a self-managed debt approach that you can do yourself.

Your first step is to create an accurate budget list. Once you come up with a realistic budget, you can gain control over your finances and make sure that you’re on track in spending. Furthermore, it is a good way to stabilize your finances to afford to pay any unsecured debts.

If you cannot keep up with your debt payments despite modifying your budget, you should maintain communication with your creditors.

How do you make a repayment arrangement with your creditors?

If you think that your budget can no longer suffice debt repayments, you should notify your creditors ahead of time. You can call, email, or send a letter to your creditor informing them of your financial condition. However, you must consider how much you can afford to pay before making an offer.

To ensure that you’re not bluffing, make sure to send a copy of your itemize debt, expense, and proof of income. This will convey an idea to your creditors that you are spending on essential costs, yet still, your budget is insufficient. Also, it implies that the amount you can afford is solely fair on the amount you owed to people.

This can help your creditors understand why you can’t afford to pay with the usual amount. For instance, when you are laid off from work, yet your essential expenses remain the same. Also, in the event of hospitalization, or when you have medical expenses at stake.

How much can you afford to offer as repayments?

The amount you can afford will depend on your budget. This means that if you have more than one unsecured debt, your leftover money for debt payments should be shared in proportion to your debts. Unsecured debts can be your payday loans, personal loans, store cards, or your credit card debts.

One way to come up with the right amount for each creditor is by determining the percentage you can offer for each creditor, which depends on the amount of money you owe.

What if my creditor disagrees with your payment offer?

In this case, a frugal attitude might help you stretch out your budget. Making sure you comply with the usual amount you’re paying might change their views and can possibly realize on considering your repayment offer or adjust the existing interest rates.

Furthermore, being frugal to make room for debt payments, can be cutting on spending clothing, footwear, eat-out, or canceling travel plans. What is important is you minimize the spending of things that are not really necessary.

Conversely, if there’s no way you can’t cut your expenses, you should not agree in increasing your usual repayment. If you are anxious about the consequences, you must know your right and read about what can your creditors do.

Will it affect my credit rating?

Paying less than what your creditor requires every month impacts your credit rating.

Usually, your creditors will request payment to make sure you are updated with your debt payments. Eventually, your creditor can default your account and terminate the contract if they can’t contact you by any means.

In this event, you can no longer secure further credit, may it be your credit card, stored card, or any unsecured loan.

If you obtain a default in your credit record, it will remain on file for six years.

So, if you wish to avoid a poor credit score, you must be up to date in paying your bills and make sure to settle any delays urgently.

Get FREE advice to settle your debt repayments

If you find it hard to cope up with your debt payments, getting another loan could make it more drastic.

If your debts are piled up, and paying to creditors each month just gets harder each month, we can help. CONTACT US and talk to our debt specialists.