How Can I Convince Creditors to Work With Us Rather Than Force Us Into Bankruptcy? – Penny

“Dear Steve,

My husband was injured in car crash 8.5 years ago, injury caused him to find work out of town (2 hours away), settlement went toward replacement vehicle. while fuel prices were so high we made ends meet by using credit cards, we are working at getting things paid off, but late payment fees, over limit fees, etc. have made it impossible, we are a little less than 1 payment behind on our mortgage I’m paying 1/4 of payment weekly.

Husband recently took 12% paycut and we are finding it harder to make payments on all our loans/credit cards. 1 credit card we make $700 a month payment and $400+ goes toward interest. Banks don’t want to talk to us because of late payments I took out 401k loan to pay off some credit cards just to have fewer payments to be late on, course I still have to make that payment, would like to pay it back sooner than later. we have never filed bankruptcy or defaulted on a loan. Usually manage to pay things off before they’re due.

How can we convince creditors that re-working present agreements would be better for both of us than forcing us to file bankruptcy?

Penny”

Dear Penny,

How can you force creditors to be logical and reasonable? You can’t.

Creditors don’t operate like you and I would. Let’s say i owed you money and ran into a tough time. We’d probably have a conversation and I’d explain my situation and you’d make some accommodation to allow me to get back on my feet. Once that happened I’d get back to eliminating the debt.

Banks operate with policies and procedures that govern how they will interact with customers. Those policies and procedures do not allow for individualism or flexibility. When your account falls X days late it goes to Y department. It is not an exercise in logic.

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I sure wish you had contacted me before taking out that 401(k) loan. I would have strongly advised against it.

If you are looking to reduce your monthly payment than the most logical option would be to first investigate a debt consolidation loan through the peer-to-peer lending group, LendingClub.com.

Sincerly,


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

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