Dealing with past due accounts can be stressful and disheartening. As bills continue to arrive at your door step, you may feel overwhelmed by mounting pressure to clear the debts as quickly as possible. Most creditors are happy to work with consumers wanting to bring past due accounts current. The process requires some legwork and a clear understanding of your financial strength and ability to repay a portion of the debt each month.
- Skill level:
- Moderately Easy
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Determine your debt-to-income ratio. Divide the total of all your minimum payments by your monthly earned income. The result is your debt-to-income ratio. Based on this ratio, determine the dollar amount you can reasonably afford to pay each month as part of a debt repayment plan.
Write a letter requesting a debt repayment plan on a past due or delinquent account. Address the letter to the "billing inquiries" department and attention it to the company representative handling the account, if applicable. Include a reference line such as, "Payment Plan for Account Number 123456."
Suggest a repayment plan based on your debt-to-income ratio. Be specific and note the maximum payment you can make each month. For example, "I'd like to work out a payment plan that involves payments of no more than £65 per month until the debt is cleared."
Express your desire to bring the account current and minimise damage to your credit report. Ask the company representative to refrain from placing any negative or derogatory reports on your credit rating.
Confirm the date by which you will mail your first payment. If you cannot make a payment before your current due date, ask to change your due date. Opt for a date when the majority of your bills are not due. Explain the reason for the change and ask that the modification start immediately.
Inquire about the cancellation or reduction of penalty fees. Such a request is common; however, approval can be based on your payment history and the age of the account.
Request a confirmation letter. Ask your creditor to outline the terms of your debt repayment agreement in writing. Retain the letter for your records.
Tips and warnings
- Retain a copy of the letter for your records.
- Pay off higher interest debts first.
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