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Contacting Your Creditors For Debt Resolution

The thought of contacting your creditors may seem like a daunting task. Creditors have a reputation of being unreasonable at best and in some cases they can even be threatening and abusive. However the bottom line is that your creditor simply wants to be paid the money that is owed to them. Contacting your creditor is the first step to repairing your credit and will in most cases lead to a mutually beneficial resolution for both parties.

Before calling your creditor, look over your most recent invoice. Check to see what the total amount is that you owe and figure out if you are able to pay the balance in full or if you will need to make a few installments towards paying off the debt. Taking the time to do this small financial assessment can put you in a better position once you are actually on the phone with your creditor. You will have an idea of what percentage of your income you are willing to put towards lowering this debt and you can avoid being persuaded into an agreement that may not be economically viable for you.

After you have assessed the amount you can pay, you will want to look at the name that is placed on the top of your invoice. Check to see if the name of the company which possesses your debt is the original creditor. If you see a name you don’t recognize, your debt may have been sold to a third party for collection. Depending on whether your debt is with the original creditor or a new debt collection agency, you may be offered different repayment terms. 

In general, your original creditor will be open to accepting small installment payments. It is in their best interest to work with you as long as you are making good faith efforts to repay your debts. They still view you as a client of theirs and trust that you will honor the financial relationship by making your payments even if they are reduced due to financial hardship. If you can contact your creditor while your account is still with the original creditor, you may have the best options for repayment as well as being able to avoid the debt being placed on your credit report. 

Contacting a third party collection agency is a different undertaking than dealing with your original company. A collection agency usually has no interest in maintaining a relationship with you as a future client and therefore may be a bit more uncompromising in their attempts at receiving payments from you. The third party agency has purchased your debt for significantly less than the amount owed. They make a profit by receiving the total amount due from you and pocketing the balance. Because of this you may have the option to pay a lesser balance to these agencies which will be considered a settlement. Although a settlement is better in the short term, it may reflect on your credit report in a negative way. In addition, the amount of debt you did not pay will be viewed by the government as taxable income which is something to keep in mind.

In the end, it is always in your best interest to take command of your financial situation and contact your creditors. Doing nothing will only result in a negative listing on your credit report which will lower your score and can take up to seven years to be erased. The earlier you contact your creditor the better, preferably when your account is with the original company. Taking a proactive approach to debt resolution will put you in the driver’s seat towards optimal financial health for your future.

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