Step 4: Prioritize Bills and Communicate With Creditors

Changes cannot always be made instantaneously. For example, if you plan to get a second job, it could take a month or two of resume submitting and interviewing before you land one. What should you do in the meantime? Unfortunately, you may have no choice but to pay some bills and not pay others (or pay less than the full amount due). Think about what bills are most important and pay those first. Every person can have a different definition of what is important, but in general, you should prioritize bills which enable you to take care of the essential needs of your family (such as the rent or mortgage, basic utilities, and medical insurance) and for which the penalties for not paying can be severe (such as child support and back taxes).

For any bill that you cannot pay in full or feel you will not be able to pay in the future, you should contact the creditor or service provider immediately. You may be scared that they will be unsympathetic and demand payment – and they may – but many creditors and service providers are willing to work with consumers experiencing hardships. The worst thing to do is nothing. When communicating, keep the following tips in mind:

  • Be specific and honest. Creditors generally like to know what the cause of your hardship was. Be specific and don’t lie. True, creditors tend to be more likely to work with customers whose difficulties are due to circumstances beyond their control (like a job loss or illness), but if you are less than honest, they may be less willing to help.

  • Have a plan for the future. If a creditor feels that you are making little effort to pay your bills, they probably will be hesitant to do anything for you. However, if they know that you are looking for a second job, trying to rent out your spare bedroom, canceling your cable, etc., it will be easier to convince them to provide concessions for a few months.

  • Remain calm and polite. When you are facing a financial crisis, it is easy to get upset, especially if the person on the other end of the line is unfriendly or unhelpful. However, yelling at a customer service representative won’t make the creditor more sympathetic to your cause. In fact, it may have the opposite effect.

  • Don’t make promises you can’t keep. It can be tempting to jump at any concessions the creditor is willing to provide, but remember, you may only get one chance at help. It is better to be honest and tell the creditor that you cannot make any payment, or can only pay so much, than to promise to send money you don’t have.

  • Keep a record. Most people prefer to first contact their creditors on the phone. There is nothing wrong with that, but it is a good idea to keep a record of what was discussed. After every conversation, record the time and date you called, who you spoke with, any actions you said you would take, and any promises the creditor made.

  • Be persistent. As the saying goes, If at first you don’t succeed, try, try again. If you call on the phone and the customer service representative says he or she cannot do anything, ask to speak to a supervisor. If that is not effective, send a letter. (You should send it to the address for billing inquiries and concerns, which is not necessarily the same as the payment address.) Ultimately, the creditor may not agree to do anything, but at least you will know that you gave it your best shot.

Fair Debt Collection Practices Act (FDCPA)
If you are skipping payments on some bills, it is unlikely that those creditors will sit around waiting for you to call them. Many, if not all, will likely call you – a lot – and probably send letters as well. While it is generally in your best interest to communicate with your creditors, you do not need to put up with abuse.

The federal Fair Debt Collection Practices Act (FDCPA) regulates collection agencies’ conduct toward consumers. (State law regulates the conduct of creditors’ internal collection departments. Many states have adopted the same or broader standards than the FDCPA.) The FDCPA prohibits bill collectors from engaging in the following activities:

  • Calling you multiple times a day. They are also not allowed to contact you before 8:00 AM or after 9:00 PM unless you give them explicit permission to do so.

  • Contacting you at work if you tell them that your employer disapproves.

  • Letting a third party know they are trying to collect a debt from you. However, they are allowed to ask for your contact information.

  • Contacting you directly if they know you are represented by an attorney.

  • Using false threats, such as saying they will sue you when they have no intention of doing so.

  • Using obscenities, racial slurs, or insults.

Additionally, the law gives you the right to stop all communication from a collection agency. You should make the request to cease contact in writing and send your letter certified mail. Once the collection agency receives the letter from you, they are only allowed to communicate with you once more to let you know the action they plan to take with the debt. Keep in mind that while sending a cease and desist letter will stop collection calls and letters, it may cause the collection agency to take legal action against you.

If a collection agency violates the FDCPA, you can report them to the Federal Trade Commission at 877-382-4357. Violations committed by internal collection departments can be reported to your state’s attorney general’s office.

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