How to Talk to Your Creditors If You Are Facing Financial Difficulties

The coronavirus pandemic has become a huge financial blow for many. Even those who received financial assistance due to being out of work will be struggling with the lost income for months to come. When you can’t work, you dip into savings. And if you don’t have savings, you go into debt.

Debt Relief During Coronavirus

If you were struggling to keep up with debt payments before, losing income due to the pandemic is enough to tilt the scales. Unemployment reached record highs in a matter of weeks. While some parts of the world are in the process of reopening, there are several reasons the economic impact of COVD-19 will continue.

1) Although many people are returning to work after weeks or months of furlough, small businesses and retail have been hard hit, and many people have no jobs to go back to.2) The lack of childcare will be particularly difficult for parents to navigate. For households with two working parents, unless schools, daycares, or other child care options also open, the period of income loss for one parent will have to continue.

3) Even if you go back to work, once you’ve taken on debt due to lost income, it’s tough to pay it back. You might have to get another job (which isn’t necessarily possible) or cut expenses (again, a difficult proposition), and you would need time. All the while, interest rates make those debts more expensive.

When you’re not earning any income, it can be impossible to keep up with things like mortgage payments or credit card bills. By speaking to creditors during coronavirus, you can get a mortgage deferral from the bank or you may also be able to talk to credit card companies about reducing interest rates.

How to Talk to Creditors

 A few tips for talking to your creditors can help you get their cooperation.

#1 Practice Communicating Your Story

Prepare for the call by writing out your story in advance. Explain why your income has been disrupted and why you need help. For example, if you work in the service industry, you can explain that you lost income due to the lockdown and could not look for other work.

#2 Talk to Creditors, Not Collectors

The earlier you reach out to creditors, the better. If you miss enough payments, the debt may be sent to a collector who will be less likely to negotiate with you. You want to talk directly to creditors who can recover more of their money without using collectors. 

#3 Keep Calm

Don’t treat your creditors like the enemy. Many will be willing to work with you, especially given the unprecedented circumstances. If you find yourself getting frustrated because you’re not hearing what you want, say that you’ll call back later when you’ve had time to think rather than blowing up. 

Debt Consolidation Programs

Not sure you’ll be successful talking to creditors? A certified Credit Counsellor from a not-for-profit credit counselling agency  may be able to reach out and negotiate with creditors on your behalf as part of a Debt Consolidation Program. A DCP offers a lot of assistance, including reduced or stopped interest, no more collection calls, and having all your payments rolled into one simple monthly payment. A Credit Counsellor can also help you with creating a budget to make sure you don’t miss those payments.

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