Communicating with creditors
Knowledge is a key tool for communicating with your creditors and credit counselors.
One of the most challenging experiences for people with money problems is communicating with their creditors. However, time and time again, the advice given to struggling consumers is always to talk to your creditors right away! Your creditor may in fact be willing to help if you contact them during a financial emergency. For example, you may have a temporary loss of income. Your credit card payment is due. You know that the credit card agreement states that for late, missed or less than minimum payments; you may face obstacles such as late fees, higher interest rates or higher minimum payments. These are just some of the potential problems listed in a promotional brochure published by the Consumer Financial Protection Bureau (CFPB) titled Act fast if you can’t pay your credit cards. However, in order to take advantage of some of the tips listed in the brochure, you must be able to speak to your creditors. The Anxiety and Depression Association of America lists worrying about paying bills as an everyday anxiety. People get stressed out about money.
One reason people stress over paying bills is fear of how the creditor may act if you are behind. According to the declarations of purpose for the Fair Debt Collection Practices Act, there is abundant evidence of the use of abusive, deceptive and unfair debt collection practices. There is a common saying, “knowledge is power.” You need to know your rights. In general, the Act prohibits communication by the debt collector with a consumer at unusual times or places. In addition, the Act prohibits harassment, threats, abuse or false and misleading information to be used by debt collectors attempting to collect. In my law practice I have had clients tell me that debt collectors threatened jail if the debt was not paid! This type of action is directly prohibited by the Act.
However, knowledge of your rights is not the only knowledge you need; you need knowledge of your financial circumstances. In the CFPB brochure, referenced earlier, three steps are laid out for dealing with your inability to pay your minimum payment. First, add up your income and expenses (looking for ways to cut costs) to recognize why you cannot make the payment. Second, call the credit card company and explain why you cannot pay the minimum. Tell them exactly what you can afford, and when you think that you will be able to restart your normal payments and be prepared with this information before you call. The final step they recommend is to consider credit counseling if you need more help.
Knowing your rights and financial situation can help you communicate better with your creditors. If you are having trouble figuring out your financial situation, you may want to seek help from a credit counselor. However, as advised in the CFPB brochure, you should first start asking questions. Will you will be charged? How much you will be charged? What services will be available to you? Knowledge is a key tool for communicating with your creditors and credit counselors. Michigan State University Extension offers a variety of money management programs throughout the state of Michigan.