Dealing with debt payments with limited income is challenging. It is especially when you are actively searching for a job. If you save for utility bills, payments for credit card bills fall insufficient. This imbalance in payments affects the credit score and increases the liabilities. It further makes it more challenging for you to repay the dues. So, what can you do here? Inability to repay the dues may invite strict action from creditors.
They may impose a CCJ or a court order. In that case, you will have to pay as agreed within a specific timeframe. However, negotiating the bill payments may ease the troubles for you. Yes, you may even escape a CCJ. The blog discusses the best ways to negotiate with creditors as an unemployed individual with a low income.
How to negotiate pending payments with creditors?
Communicating your payment difficulties and approach with creditors is important. It helps you determine how much you can realistically pay. If you have been in a long relationship with creditors, and he knows you well, he may understand your situation. Accordingly, you may get expert assistance to manage your debts more easily. It reduces your monthly liabilities and overall loan payment amount. Here are further considerations to undertake:
Request a payment holiday
A payment holiday is a period during which you don’t need to make repayments. A creditor does not constantly nudge you to repay the pending dues. You may rationalise one until your financial situation improves. However, the interest continues to increase whether you pay or not. It may make the loan even more costly. Decide the payment holiday term accordingly and try to resume payments at the earliest.
Check possibilities to freeze interest
Yes, you can ask or request your creditors to freeze interest on your debts. It is especially when experiencing financial difficulties. Not every loan provider may agree to it, but some may. You should analyse the possibilities to manage finances better. You can ask your creditor whether he may agree to it. Even if he does, he may not halt the interest payments for long. Alternatively, check the pending dues and try to clear half of them. It also reduces your interest liabilities.
You just need to calculate how much you need to pay and save accordingly. Squeeze your finances a little to make space for such savings. If you encounter any emergency in between, options like loans for benefits may help. Yes, some loan providers consider individuals with bad credit history who sustain on government benefits income.
Explore affordable loans for people on universal credit from a direct lender online. Yes, you may get a loan on a benefits payment if you have valid proof of that. It will help you support critical loan payments without worrying about financial hiccups. You may get a flexible repayment structure according to what you can afford currently. It would not affect your important bills and payments.
Ask to consolidate debts
Consolidation is one of the best ways to reduce debt liabilities at once. You can even fetch better interest rates and terms on the new loan by merging pending payments. Check and calculate how much money you can save by consolidating debts using a loan calculator. If it promises significant savings, then this deal is for you. Consolidating debts helps you reduce monthly payments, loan interest costs, and overall payable amount. It thus makes it easy and manageable for you.
You can either get the loan from the current creditor only or explore your options. Fetch the one offering the lowest interest rates, APR, and other costs.
Focus on repaying important debts
If you cannot pay it all, at least consider the most affordable ones. Focus on council tax, utilities, and secured loans. Credit card and unsecured loan providers may be more flexible and accept reduced payments. Paying at least partial payments is always better than not paying at all.
Moreover, settling or paying the smallest debts also gives you some confidence. It reduces some liabilities and helps your credit score. It also generates credibility on other loan terms and payments for the creditor. Here is what you must consider before starting to repay the small debts:
- What can you realistically repay, given the other payments?
- Halt non-priority debt payments for some time
- Check how much you can pay to each creditor
- Write to each creditor about how much you can pay and the reason. You can even ask them to freeze interest costs.
Stay in touch with your creditors
It is one of the most important aspects that helps you repay the debts comfortably. Keeping your creditors in the know about your financial circumstances helps avoid legal actions.
You may not want to attract unfavourable circumstances when in debt. Inform about every single repayment and the reason why you cannot repay that. Your creditor may understand if you choose to keep things transparent.
Negotiate a partial settlement
Individuals struggling continuously to repay the debts may consider this option. Identify whether your creditors can reach up or negotiate a partial settlement. It is especially possible for individuals who have gone bankrupt or are delinquent. A partial agreement between the creditor and the borrower is the promise to repay what you can, given the circumstances.
Not everyone agrees to this; however, if you are in a serious financial crunch, creditors may provide you with this option. Ensure to get new payment terms and the amount to pay in writing. It should be an authentic agreement that reveals the consent of the two parties involved.
Bottom line
These are some ways to negotiate with creditors if between jobs. Identify how much you can repay on the loan without affecting your basic expenses. You must not hinder the compulsory expenses like rent, groceries, and other utility bill payments.
Otherwise, you may struggle to float freely on the financial front. If needed, check whether you may get help from your creditors there. Some may help individuals plan a successful payment plan and get debt-free quickly. They design one according to the current status and affordability of the individual.
