Tips for Talking to Creditors When You Can’t Pay Your Bills

Tips for Talking to Creditors When You Can’t Pay Your Bills
April 15, 2020 Prosperity Connection

In our previous blog post, we talked about why it’s important to contact your creditor or service provider before your payment is past due. As promised, for the rest of the week we’re going to move from talking about why you should take action to give you some concrete steps toward addressing your financial situation. These tips are going to require a bit of research and maybe even an inspirational speech or two, but the reward is that they might provide the breathing room you need to prevent an emergency from turning into a full-blown financial crisis.

Tip #1: Contact Your Provider Before the Bill is Due

Time is of the essence, and you’ve more likely to get a positive response if you contact your creditor, utility company, etc. before your bill is due. For some relief programs, keeping your account in good standing is required to qualify for assistance. This rule is particularly important if you know you can’t pay your upcoming bill, in which case it’s critical that you contact your provider before that unpaid bill disqualifies you from much-needed relief.

Tip #2: Do Your Research

Doing a bit of prep work before contacting your landlord, service provider, or creditor will help you feel more confident and informed when seeking support. Doing your research will also give you an idea of what’s available, as well as identify if your provider is trying to scam you or otherwise illegally take advantage of you. Some key aspects of this research will likely include:

  1. Gathering information on all bills you have coming up, including which companies you pay and whether or not your account is currently in good standing.
  2. Checking online to see if your creditors, etc. have been advertising any COVID-19 or other relief programs for customers experiencing economic hardship. One useful place to look for this information is your email, since a number of companies have been sending newsletters to customers informing them about available options.
  3. Staying up-to-date on government relief and new regulations. You don’t need a law degree to do this. All you need to do is keep a list of trustworthy resources that you check before reaching out to providers. The Consumer Financial Protection Bureau and the Department of Education have information hubs specific to federal programs around student and consumer debt. Locally, the Metropolitan St. Louis Equal Housing and Opportunity Council has a wealth of information on renter and homeowner rights, while org has a comprehensive hub of information spanning the entire St. Louis metro area. Topics range from utility assistance to eviction moratoriums, and information gathered from a variety of verified sources on an easy to read website.

Tip #3: Be Prepared to Explain Your Situation and Know What Kinds of Questions to Ask

Remember to keep all paperwork related to your medical history and job or income loss, since you should be prepared to discuss (and prove) how those events are connected to COVID-19 and your need for payment flexibility. For a number of programs, proving that your inability to pay – whether it’s due to sickness, caring for a loved one, or a layoff – is connected to the coronavirus pandemic is required to qualify for relief. Some other things you should be prepared to explain: how much you can pay; if/when you’re likely to restart regular payments; and your income, expenses, and assets.

If your provider doesn’t already have an established relief program or that program is still unaffordable for you, you should also be prepared to ask your provider about what kinds of payment modification options they have available. If they’re willing to negotiate, some examples of common payment modifications include: changing your payment date, asking for an extension, or renegotiating a new payment plan with a lower monthly amount.

Tip #4: Beware of Scams and Read the Fine Print

Unfortunately, not all creditors will negotiate in good faith, and some scammers will try to use this moment as an opportunity to trick vulnerable people out of desperately needed money. Even when it comes to companies that are working in the best interests of their customers, the devil is still in the details, which is why the research from Tip #2 is so important. In general, if an offer seems too good to be true, it probably is.

Another important detail is that many legitimate relief programs are temporary and come with strings attached. Depending on the creditor, landlord, utility provider, etc. you may owe the full amount of your missed payments on the day the relief period ends. This is why it’s essential to have a candid conversation with yourself and your creditor about which payment plans you can and can’t afford, while also seeking out community resources that can help you stretch your dollar as far as possible.

Tip #5: You Don’t Have to Do It Alone

Whether you’re looking for free financial coaching, legal assistance, or counseling and emotional support, there are lots of people and organizations dedicated to helping you navigate life during the coronavirus pandemic. You don’t have to handle everything alone, and at Prosperity Connection our coaches are happy to work with you to find a financial plan that works best for you and your family.

Nay’Chelle Harris, Financial Coach