X. FINANCIAL AND BANKINGMATTERS Debtor/Creditor Often disasters can trigger financial crises as victims fall behind in their bills.
Missed payments or collection actions can damage credit ratings. Victims should notify creditors of the situation as soon as possible. Some creditors will agree to postpone payments for a period of time.
Communicating and Negotiating with Creditors If the debtor can afford to make small monthly payments, s/he should contact the
collector to ask if the payments are acceptable and reach an agreement on all of the following:
1) Total amount owed on the bill, including the interest to be added each year; 2) Amount of monthly payments; 3) Due dates that payments must reach the collector; 4) Address where payments must be mailed; and 5) Whether the collector will remove negative information about the bill from the debtor’s credit report.
Documenting Communication between Debtor and Creditors It is important for debtors to keep a record of phone calls from the collector
regarding the past due bill, including the full names of the individuals s/he speaks with and date, time and details about the conversations. If the debtor arranges a payment agreement, s/he should send a brief letter confirming the terms of the payment plan. The debtor should always keep copies of any letters and payments sent to the collector. Letters to the collector should be sent certified mail. Non-profit consumer credit counseling services may negotiate with collectors on behalf of debtors for little or no fee. See the business listings of the White Pages of the phone book.
Notifying the Collector of Debtor’s Inability to Pay Some debtors who have no employment income or prospects for such income
might be considered “judgment proof.” A “judgment proof” debtor will likely owns no real estate, no personal property of significant value, no more than one car, and would probably not have bank accounts or other investments. Such debtors who are unable to arrange a workable payment plan should consider sending the collector a letter informing them of the inability to pay and requesting that the collector stop contacting the debtor about the debt. The debtor should include in the letter any special circumstances which help explain the inability to pay. Sending such a letter limits the collector’s right to contact the debtor.
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