Communication with Creditors: Set an Arrangement that is Right for You
If you find yourself treading water when it comes to a debt, whether a student loan or any other type, one of the best things you can do for yourself is to take action before the problem worsens. A key part of this is to keep everyone involved informed before your first payment becomes overdue.
Communicate with your creditors. If you find yourself in trouble, do your best to let your lender know as soon as possible. If you keep in touch, they will feel more comfortable- they can verify your address, your phone number, update their records. They may feel less inclined to turn your account over to a collections department if they feel you are cooperating and aren't trying to duck out of your debt.
They may be able to temporarily reduce your payment or make another arrangement with you which will prevent your credit from being damaged. Creditors will be more inclined to work with you because you took the step of getting in touch with them instead of them having to try to find you. While there are some bill collectors who enjoy being unpleasant, the company that resorts to hiring collection agents really only wants their payment. If you can work with the company to find a way to get them something, it may be worth it to them to wait. They can then avoid paying for the collections service and you can avoid the added fees involved.
Don't abuse the process. Unless you have an actual emergency, don't use this option. Repeated pleas for assistance or special arrangements may wear out your welcome. If you make an arrangement, stick to it. If you set an arrangement and don't follow through, should you ever need another one, you may be denied.
Sit down before you phone or email and take a hard look at your finances. Decide what you can pay, when you can pay, and what length of time you anticipate needing help. Don't tell the person you speak to your exact figure. Instead, the secret is to come in under that figure. Negotiate a better deal for yourself.
Additionally, if you get paid on Friday, don't promise to bring the payment in on Friday. Make the arrangement for a later date. The trick, then, is to go ahead and make the payment on Friday. When you make the payment early, you will look better to your creditor. If you are held over at work or you get a flat tire, rendering you unable to deliver your payment, you still have that extra cushion of time to make it in without actually being late.
If the arrangement is for less than you calculated you could pay, do one of two things: either go ahead and make the extra payment on top of your arrangement, gaining points with your creditor for exceeding the agreed upon amount, or set the difference aside each time, treating that money as if it doesn't exist. That amount will begin to build into another small fail-safe for you should you get to one very bad week or month and find yourself just a bit short of the needed payment. Either method you choose, you win; you make your record look a bit better or give yourself another small emergency cushion should something go wrong.
As you place the call, don't promise what you can't deliver. In some cases, if you default on an arrangement, you may find your account sent straight to collections. If you can't come to an agreement, say thank you and end the call. If you do make an arrangement, be sure you understand all of the rules and consequences associated, make a record of it and then follow through. You don't have to argue or be intimidated. This is a simple business arrangement, one where everyone wins.