Negotiating An Informal Arrangement
If you are having difficulty in making your monthly bill payments (or you are thinking that you are going to have trouble due to an unanticipated circumstance that has come up – car repair, school fees, etc.) your first reaction may be to simply ignore the problem (i.e. simply not make the payment) and then deal with whatever the creditor or creditors do to you as a consequence of not making the payment (a phone call, a letter, taking money directly out of your bank account, stopping utility services, garnishee, etc.). Doing nothing is a very normal consideration (and it is one that most people will immediately default to), but it is, unequivocally, the worst thing that you can do.
When we can`t keep our original financial commitments its natural to be afraid of what people will think of us and so it is natural to want to avoid the conversation. Will they think we are dishonest? Will they think we are a liar? Will it reflect poorly on my parents, my spouse, my children?
The fact of the matter is that people and businesses have to change their financial commitments to each other all of the time. A promise is really a commitment to do something based upon the prediction that you will be able to do that thing if the current situation remains the same. But things never do remain the same. Life happens; curve balls get thrown and everyday we find ourselves (and the people and businesses that we have relationships with find themselves) in situations were we are both unable to do what we said we would do the day, month or year before. Are we disappointed when this happens? Sure. Do we think the person is a dishonest, liar that is ruining her family’s good name. No, of course not. We understand and we empathize with them. But you have to remember that the only way that we can understand and empathize with someone is if we talk to them.
So that`s really the first step that you need to take when you find that you are having trouble (or you think that you are about to have trouble) in paying your bills: talk to your creditors. Call them up and let them know the situation. You will be very surprised to find out that your creditors are often more than willing to work with you – after all, they know that situations like this happen all of the time. This is what we would call an Informal Arrangement.
An Informal Arrangement is a terrific tool that works great if you only have one or two creditors. Once you start to have multiple creditors things get a lot more difficult because there are more players involved and there needs to be a lot more detail and disclosure of income and expenses. This is when it helps to speak to a credit counsellor like the ones we have here with Bromwich and Smith.