Managing your finances isn’t always clear-cut. There are circumstances beyond your control that, if they were to happen, could turn your world upside down. Unemployment, the death of a loved one, divorce, a health scare, a serious injury, any of these traumatic events could take place resulting in the need to exhaust your finances. As you handle those personal emergencies, however, the bills continue to add up. Before you know it, your credit status has gone from good or fair to poor and your accounts are seriously past due.
Allowing those accounts to get charged-off or turned over to collections is the worst thing that could happen. It can drop your credit score by several points and result in a cycle of debt that can be expensive to get out of. Whether you have a lot of money to work with or not, there are some things you can do to handle those delinquent accounts.
Make a Minimum Payment
If your account is past due and you don’t have much to offer, paying the minimum payment can help. It won’t be enough to get rid of the debt entirely, but it can prevent the debt from going into collections and ruining your credit even further. Minimum payments are often small, so even if you have a smaller budget, you should be able to factor in those payments.
Lump Sum Payments
Let’s say you were unemployed for the past year but recently found a new job. You want to clean up your accounts before things get out of hand. You could contact the creditor to negotiate a lump sum payment that would get your account out of a negative status. They may be willing to remove late fees to help you pay down the balance faster. You can review your options for bad credit installment loans and apply with a lender best suited for you. The funds can be used to pay a chunk of your debt and then you can repay the loan over time.
Good Faith Payments
If you’re unable to pay on a bill and the minimum payment is too expensive, you shouldn’t give up yet. You can make good faith payments on the account to show your attempt at resolving the matter. Paying $10 a week on a debt may not seem like much, but it does bring down the balance and show the creditors that you’re trying.
Sometimes you have the means to pay something, just not the amount they’re asking for. Creditors understand this, and in an effort to recuperate their losses, they will try and work with you. Review your budget to see how much you can afford to dedicate to this debt. Then, contact the creditor and let them know what you’re able to afford and how often. They may be willing to set up a new arrangement with you provided that you stick to it.
Life happens all the time and there’s simply not much you can do about it. If your finances have been disheveled as a result of something traumatic and you want to pick up the pieces, start with your delinquent accounts. Delinquent accounts are bad for business. If they get turned over to collections, you’re talking higher expenses and more rigorous collection efforts. You can nip all of this in the bud by using one of the above suggestions for resolving the debt. Though it may take you time to pay it all in full, your continual effort will lead you closer to financial freedom.