Working with Creditors: How your mouth might just save your *ss.

Posted 02.02.2016

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Strong communication skills are needed to manage in any economic cycle but when the situation gets tough it can be far tougher to communicate with stakeholders. For many business people, that call to a lender letting them know a payment will be late or go NSF is one that goes way back on the to-do list. Reactive vs proactive is the strategy here and I can tell you it doesn’t work very well.

The trouble with waiting for the lenders to call you is that, but this time they do, you are already on their naughty list and they will be on the offence. Collectors are people too (yes it’s been proven) and they don’t like making unfriendly calls either. So to help a little over the holidays here are some tips for working with lenders in these difficult times – they may help you maintain credibility and possibly your credit rating!

  1. Give Advance Notice: If you know a bad month is coming, call your lenders right away and let them know. Follow up with a written record (email) so you have a history. Ask for their advice and what they can do to help.
  2. Have a Plan! Right after you tell your creditor there is trouble ahead they will ask you what your plan is to make up the late pmts. Have a plan ready and make it simple & realistic – it’s better to under promise and over perform.
  3. Prioritize and Rotate. If money is tight you have to chose who you will pay and how much. You can either take a group of lenders or creditors and pay them a little or you can rotate who gets paid when. Most lenders will allow one month behind but once you get behind two or more, your file may be ‘elevated’. Not all Lenders are Equal. Some will do their best to work with you and some might be ready to pull the pin at the first smell of trouble. Pick your battles.
  4. Keep in Touch. Call or email your lenders with progress – nothing elaborate but just status updates. Information is power and the more you can make your lenders feel involved the more latitude you will get.
  5. Know your Rights & Obligations. What does the loan or lease allow the lender to do, what is the process if you can’t pay, what are the charges and penalties…

There is no magic formula when it comes to managing debt in tough times. The closest thing to magic is your ability to communicate. Use your mouth – use it to inform, ask questions, follow up and be thankful when needed, it might just save your “donkey”.

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