When you are way behind your repayment of your debt it is best to make some arrangements with your creditors so that you can make the payments to them directly. It will give you some breathing space to arrange, make plans to take control of your fragile financial situation as well. You have to put together all your expenses and incomes to make an accurate budget to start with. Once you have made a manageable budget you will come to know about how much you can afford realistically toward the payment of any unsecured debts after deducting your essential costs for living.
Establish A Contact
It is often very useful to establish a contact with your creditors directly when you are in arrears with your creditors. You can contact them over the phone, write a letter or get in touch through email. Tell them about your financial hardship and ask them for an offer so that you can pay as much as you can afford. You can substantiate it by sending each of them a copy of your budget along with a list of all your other debts that you currently have. It can give you a glimmer of hope and your creditors may consider your case seeing that you are only spending on your essentials and the offer that you have made is fair enough when compared with the total outstanding amount to all creditors.
Offer What You Can Afford
You must not feel pressed to agree to an amount which you cannot afford to pay each month given all the essential expenses that you have to make. Calculate an amount which you can afford to carry on paying and do not make false promises. To calculate you will have to share the money that is left over all the unsecured debts like personal loans, credit cards, store cards and overdrafts. The most effective and common method of calculation is to work out a percentage that you can offer to each creditor based on the outstanding amount to each of them.
Cut Expense And Save More
You have to also be flexible in your budget and make some curtailments in your expense without being unrealistic. With this extra amount saved you can pay a little extra to each creditor which will create a positive impact in the minds of your creditors. This willingness to pay can even result in their agreeing to your plan of repayment and can even inspire them to stop the extra charges being added to your default amount.
Save Your Credit Rating
When you pay less than what you should, it will affect your credit rating. It will make it harder, if not impossible, to get any further loan. If your account is defaulted it will affect your credit for at least six to seven years. The only way to avoid poor credit rating is to pay your dues on time. There is a very useful way to clear all your debts by taking a credit card debt consolidation loan of a big amount at lower rate of interest while your credit score is good enough to borrow.