I am going to stop paying my credit cards. Should I talk to the banks first?
My credit score right now is 712. I am always on time on my payment (monthly electronic payment). I will not be able to make my monthly payment after June. I know one of the drawback of debt settlement is your credit rating. I know I will be able to manage to pay cash if I don't have the debt I am carrying now.
Can you tell me if it will be to my advantage if I communicate with my creditor first? How would I approach them properly?
Speaking with your creditors first before you miss a payment typically will not yield any result. The bank customer service agent may refer you to a consumer credit counseling agency. The purpose of that would be for you to speak with a credit counselor at a non profit agency to see if you can qualify for a debt management plan where your monthly payments on the bills in the plan can be made affordable due to the lower credit card interest rates that come with the plan. If you want to check into that, you don’t need the banks permission. You can do that now.
Speaking to your creditors AFTER you miss payments is recommended and will yield positive results. Being proactive and making calls into your credit card companies you owe at least once a month to let them know where you are at is as simple as: “I am calling to let you know I have a financial hardship (state what that is – loss of income, medical, mortgage reset, etc), I am working hard to come up with a plan to get back on track, but right now I cannot afford my payments. As soon as I can raise the additional income I will get back on track with paying you”. As each monthly billing cycle comes and goes without the credit card bill being paid the communication with the bank will take on different meaning and provide you with opportunities for lower payments or settlements for less than the balance. The whole process is pretty simple when you have a plan in place and stick to it. There are some “to do’s” and “not to do’s” along the way that, when understood and implemented or avoided, will add to your success. Consider joining our education and membership program to better prepare yourself for debt settlement if that is the direction you are going.
I am glad you have a grip on the fact that you have debt that needs your full attention, not a credit score that needs to be nursed and coddled. You are way ahead of the pack on this. Many people struggle with bills they cannot afford (some times for years) before fully understanding this. The fact is, your credit bounces back after settlements are completed. There are simple steps to take to ensure that your able to access credit products at fair rates again.
Anyone with questions or concerns about what to say to your credit card lenders, before or after your payments stop, can post in the comments below for feedback.