When Your Creditors Come Calling

Only people who have never been in debt find it hard to imagine the anguish it causes. The truth is debt afflicts whole households and destroys families. Many people are currently suffering directly or indirectly as a result of debt. The nightmare of debt is often made worse by the fact that less scrupulous creditors will sometimes back up their demands for you to pay up with harassment and threats.

Chronic debt is like losing a loved one-it is an experience many people have, and which affects them in the same way. Of course no two situations are identical. But speak to somebody with debt problems and he or she will almost always tell you about feelings of guilt, anger, fear, shame, loss of confidence, loss of dignity, loss of hope. These things make up the landscape of debt. Below is an outline to help you act wisely when you get into debt. It gives you an idea of what can be done if you simply don't have the means to pay all your creditors.

Seek help from finance experts.
If debt is severe, certain steps need to be taken. The first step is to seek expert advice. Financial advisors are used to handling money problems; they can give you invaluable help on every kind of worry from headaches to bankruptcy. They won't think you are foolish or inadequate or a failure. They know how easily debt arises, and they are sympathetic to the smallest problem you face.

Get priorities right.
One mistake debtors often make is to cut down the quantity of their debts by paying off the small ones first. This is like fighting mosquitoes when you are sitting in a cage of tigers. There might be more mosquitoes than tigers, but it is the tigers you need to worry about -- even if, for the time being, the mosquitoes are being more of a nuisance. And this is often the case. Your smaller creditors --that is, the ones who have least power to make you pay up-are the ones most likely to come knocking on your door. When this happens it is essential to give priority to those who can hurt you more.

The shopkeeper may bother you a lot more than the building society that gave you a mortgage. Both are making legitimate demands. But if you pay the shop first, you will have less money left over for the building society. And it is the building society that can really do you harm. The shopkeeper may finally take you to the court; but the building society can repossess your house and leave you without a home. So one of the first tasks for someone in serious debts is to put his or her creditors in order of importance, beginning with, for example, mortgages. Any loan for which you put up your home as security or a secured loan carries the risk of the creditor taking the property over if you default.

Rent is a priority debt. If you fall behind on rent payments, a landlord is entitled to obtain a court order and evict you. The landlord could also have your possessions in the home seized until the rent arrears have been paid. If you don't settle within some time, your possession could easily be auctioned.
Recognizing priority debts, however, does not mean ignoring the rest. In fact, when it comes to handling creditors of all kinds you should remember that a little co-operation goes a long way. There is nothing more likely to antagonize a creditor than to leave him in the dark. So make sure you observe a little debt etiquette; always keeping your creditors fully informed of your situation.

A person who has fallen behind on credit repayments through sudden and unexpected redundancy is more likely to win sympathy than someone who has simply stopped paying. Not that sympathy as such is what you are after. What you want to impress on your creditors is your awareness of the difficulty, your concern to do everything within your power to meet your commitments.

Always be courteous, patient and reasonable. Always act reasonably, even when you seem to get nothing back but threats and final demands. Nearly every creditor will accept even a small settlement provided he or she knows he/she is being treated fairly. All you have to do is to prove you are being fair. There is nothing more likely to antagonize a creditor than leaving him or her in the dark.