by Monique Morgan

Created on: January 11, 2011

There is a knot in my stomach as I read "PAST DUE" on my credit card bill. I check my billpay records, and sure enough, I forgot to send the payment. I immediately call the company to inform them I will be sending a payment so that they can document it on the account. Lucky for me it was just a mistake, I had money to pay the bill.

I was not always so fortunate. I have experienced two job losses in the past. With that came the misfortune of not being able to pay even the minimum amounts due on my credit cards. I felt embarrassed, upset, and just plain angry. At first I did all I could to avoid the situation and the creditors. Finally, I broke down crying realizing the situation will not fix itself unless I face it. I picked up the phone and dialed my creditors.

To my surprise, rather than the harsh "we don't care" attitude, the creditors were very empathetic in both cases. 

Negotiating with the creditors was really not that difficult. Here are a few things I offered them:

1. Automatic deduction of my bank account for a fixed number of months. With a guarantee of payment for four months, the creditor reversed  all my late charges and lowered my interest rate

2. A guaranteed amount for a fixed number of months. The creditor sent me the "contract" of the amount I promised them. In return they reported me back to "good standing" on my credit report, and lowered my interest rate drastically!

3. Information! Let them know your financial situation! Believe it or not, they do have programs that you can enroll into. I filled out paperwork for one creditor for such a program. I received a fixed apr rate of 11.9%, and to my surprise they credited my account the difference of the past apr rate( 25.99%) that they were charging me when I became past due. When I was late on their payments, they did not charge me late fees either. That got eliminated when I enrolled into the program.

Lastly...you can attempt to settle a payment. I really do not recommend this route however. What people fail to realize when trying to "settle" an account, you usually need the money to pay the amount in full. So if you owe $5000 and you offer $2500, you need to have the whole $2500 available to send for payment. Also, you could be taxed for the settled amount. You have "gained" $2500 income from the creditor because you could not pay the whole $5000. So IRS has a right to tax you for the amount the creditor has to take a loss on.

Whatever you decide, remember do not be hard on yourself. Face the problem. Come up with a solution. Present it to the creditor. In time, you will be back on track with your bills. Good luck!    

Learn more about this author, Monique Morgan.
Click here to send this author comments or questions.