If you make a payment late, your creditor will send you a bill reminder in the mail. Some may also utilize bill collectors to call you. However, as you prolong the repayment of your debts, the collection attempts will become serious as well.  You may receive a series of notices by mail and frequent calls from your creditor.

What is the best way to deal with a past due account?  It’s important to keep in mind that as you prolong the repayment of your debts, the impact on your credit score also gets worse.  If you do not take a positive step right away, one delinquent account can lead to an extreme debt situation.  In this article, we present tips on how you can manage past due debts more effectively:

Speak with your creditor. Never try to hide or ignore a creditor’s attempt to contact you.  You do not want to wait until your debts are passed on to a debt collection agency since negotiation will prove to be even more difficult.  At the first sign of trouble, you should speak with your creditor and try to work out a modification with your repayment terms.

Pay off your complete balance.  Of course, the best way to recover is to pay off your full balance.  You may request your creditor to waive the late fees if you can submit the full payment at once.  Don’t forget to request the creditor not to report your delinquencies to protect your personal credit history and creditor.  Most creditors would be willing to make the adjustment to help a borrower who is sincerely trying to keep up with debt repayment.

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Consolidate past due accounts.  If you are dealing with multiple debts, you may consider taking out a debt consolidation loan to pay off all your past due charges.  This way, continuous debt accumulation due to the monthly interest rates and late fees, can be avoided.  If you are dealing with credit card debt, another way to consolidate credit card accounts is to apply for a new credit card with zero interest rate on balance transfers.  Thus, you can concentrate on paying only your original debt without incurring APR charges each month.

Work out a settlement. If keeping up with your debts is truly a burden, you may try to work out a debt settlement deal with your creditor.   If you explain your current financial situation, a creditor may agree to reduce your total debt by up to 50% if you can make one lump-sum payment.  Most creditors will prefer a settlement than to wait until the borrower files for bankruptcy.  Take note that negotiating for debt settlement can dramatically pull down your credit score.  Nevertheless, it will be much easier to improve your credit rating later on once you have settled your debts.

File for bankruptcy. On an extreme situation, filing for bankruptcy can be the only solution.  Before you decide to take this path, be sure to ask advice first from a trusted or government-accredited credit counseling agency.  You should be well-aware about how the whole process is done, what you can expect and the possible consequences of having a record of bankruptcy in your file.

About the Author

Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended Bad Credit Credit Cards

 

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About Melanie Mathis

Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. Connect with Melanie Mathis on Google+