If the amount of money that you owe and your ability to pay it back worries you then this is a sign that you need to get some help. You may need a long-term and formal legal agreement to sort yourself out here or simply something more informal such as a debt management scheme that gives you a little breathing space and makes it easier for you to manage your debt repayments. At some point most of us who are having problems with the money that we’ve borrowed will reach the stage where we will admit that we need some kind of solution.
But, one thing that many of us with debt problems don’t do, however, is to think about telling our creditors what is going on or simply that we think we may be having problems. We do have a tendency to see creditors to whom we owe money such as lenders as something to be scared of. So, for example, if we are having problems repaying our mortgage then we might worry about actually telling our mortgage lender in case they simply go and have our home repossessed.
Repossessions may be on the rise but this does not mean that mortgage lenders actually like having to take this kind of action. For most reputable credit lenders in general the formal or legal measures that they can take to chase people over their non-payment of debts are last resorts and they will not necessarily always take them. But, as we say ‘It’s good to talk’ and not communicating in a timely manner is what causes people most problems with their lenders.
So, what are the three reasons why you should tell your creditors when you are having (or think you will be having) problems paying them what you owe?
- They can only actually help you if you tell them that you need help. If you can tell a lender before you miss a payment that you are likely to do so rather than simply leaving them to find out when the payment isn’t made then this may work in your favour. The majority of lenders are well used to dealing with people who have all kinds of debt management problems and they all have options that you could use to take the pressure off for a while. So, for example, your mortgage lender could allow you to only make interest repayments for a few months or your credit card company could allow you to make a more affordable series of payments.
- If you allow payments to be missed and build up arrears then your debts will simply get worse. And, your lenders will have no option but to take formal and/or legal action to get their money back. If they are forewarned here or if you call shortly after the fact to explain your situation then this action can be postponed/delayed. Again, having the courtesy to tell them what is happening here can earn you a lot of goodwill.
- As we have already mentioned, talking to a lender may give you a short term solution to get some breathing space. If you come to some arrangement with your lender to help tide you over for a couple of months then you could use this breathing space to ease your financial stresses and strains while you look for a longer term solution.
The key thing to remember here? Lenders are not ogres. They don’t want to send the bailiffs round or have your home or assets repossessed. But, they will take action to get their money back if you don’t keep them informed about what is happening. So, do yourself three favours and talk to your lenders as soon as you can if you get into trouble making your repayments.