Payment Problems

Preserve a good credit record – even when you can't pay.

Unfortunately, as consumer credit has become easier to obtain, many people have found themselves overextended and unable to make the payments required by their credit agreement. If you should ever find yourself in this unhappy situation, there are some steps you can take.

Your first step is to get in touch with your creditor as soon as you know you will be unable to make a scheduled payment. In many cases, the lender may be willing to let you make a smaller payment than what you originally agreed to, or rearrange your payment schedule. This type of arrangement can also help to preserve your good credit record, since your creditor may decide not to report you as delinquent to the credit reporting agencies.

If you have already fallen behind on your scheduled payments, you will probably be contacted by the lender's collection department. At first you'll receive a gentle reminder, but if you still don't make the payments you agreed to, further communications will take on a much less accommodating tone. If you still can't pay, the creditor's next step will be to turn your account over to a collection agency or an attorney who specializes in collections.