Sooner or later, people suffer circumstances that make it hard for them to meet their financial commitments. Most people as a result of embarrassment and not knowing what to do make their situation even more difficult by doing nothing. The best way to deal with this situations is by taking action. Here are some helpful steps.
Call your creditor:
Many banks or lenders have programs in place for hard times. A bank may be able to waive your payment for several months or reduce interest making it easier for you to meet your payments. You will have the most success with this if you are completely honest about your situation and tell them when you anticipate a change in your circumstances. Be careful to not be overly optimistic on your ability to repay, and allow them to suggest options. Sending an account to collections or allowing homes to be foreclosed in is incredibly costly and any creditor will favor working with you over letting this happen. The creditor will be the most flexible if you call as soon as you start having problems, and not after several months of missed payments.
Keep in contact with your lender:
Even after you make arrangements, it is possible that your situation may change. If this happens, notify your lender right away. You will also need to make sure you have a good explanation if you need to make new arrangements. A lender will become more favorable to the situation if they know that you are at least making partial payments towards you amount in arrears.
Continue to care for essentials:
No matter what you situation is, make sure to continue to pay essentials first. These include food, housing costs, and basic transportation. The temptation to eliminate or miss these payments can be enticing, but avoid it.
Remember everyone has times of financial difficulty, but your ability to be honest and prompt in making arrangements will help your life and your credit.
Joel Olson is a Revelstoke-based mortgage broker.