If you ignore your creditors and don't explain why you cannot make your payments, your creditors may assume that you are avoiding paying and have no plans for future payment. Instead, you should call your creditors and let them know you're having problems paying. The worst that can happen is that they will continue demanding payment. But sometimes the creditors may be willing to work with you to lower your payments for a while.
If you and the creditor agree, a payment plan could lower what you pay each month for a period of time. A creditor might agree if they see you cannot pay your original payment amount.
Sometimes creditors are willing to work out payment arrangements through organizations known as Consumer Credit Counseling Services (CCCS). A CCCS will look at your income and expenses. If CCCS thinks you have enough income, they will put you on a budget.
A CCCS will also try to work out payment arrangements with your creditors. Assuming your creditors agree to an arrangement, the process works as follows:
- You send the CCCS a check for a certain amount each week or month.
- CCCS will divide your check up among your creditors. The creditor will pay a fee for this service. Many creditors prefer to work with you and receive some payment instead of not getting anything.
Finding a consumer credit counseling service (CCCS)
There are many different Consumer Credit Counseling Services (CCCS) groups out there.
The National Foundation for Consumer Credit (NFCC) is a CCCS national accreditation group. The National Foundation for Consumer Credit makes sure that all of its members maintain certain standards for the benefit of the people who use its services. All of the member agencies of the NFCC are non-profit, community based groups that offer money management, education programs, and confidential credit counseling.
If you wish to contact one of their agencies, you can call 1(800) 388-2227.
Past due notices
If your creditors won't make a deal with you for a payment plan, your creditors will start to send you past due notices. They may send you threatening letters or call you to demand payment or sometimes the creditors will do both. Creditors cannot force you to pay (without going to court) or send you to jail, but they will continue to contact you. Creditors can report you to a credit bureau which will lower your credit score.
Your creditors may eventually send your account to a collection agency. The collection agency will also try to get you to pay the bill.
Updated: January 2017