December 8th, 2009 by Reed Allmand 
When debtors fall behind on their payments, they can often lose access to the very things they need to get their financial lives back on track. Once a debtor is 60 days late on their credit card payments, most credit card companies block the debtor from access additional money on that credit card. They also report the late payment to the credit bureaus which can create a domino effect that makes it more difficult for the debtor to get on their feet. Here are three tips on protecting your finances even when you’re facing financial difficulties:
- Once you realize that you are unable to make payments on your mortgage, credit card or even utility payments, contact your lender/creditor immediately and ask for a hardship arrangement. While some lenders such as credit card companies may be difficult to negotiate with, many others are flexible and have vested interest in helping you keep your head above water. Hardship arrangements could include payment deferment, temporarily reduced payments or in the case of a mortgage – a loan modification. Get all agreements in writing.
- Reduce your expenses and deal with the most pressing issues first. For example, if you are several months behind on your mortgage, you could face foreclosure soon. It’s important that you make avoiding foreclosure a priority. The same goes for credit card delinquency. If a credit card company is suing you, it is important that you take action to protect your assets. Once a credit card company wins a lawsuit (and they will most likely win) they will have the power to take drastic actions such as seizing your bank account or garnishing your wages. If you are facing a credit card lawsuit, you may want to consider bankruptcy, which takes us to our final tip.
- Consider all of your options, including bankruptcy before your financial situation get worse. Bankruptcy will stop all collections efforts against you, including foreclosure, lawsuits, wage garnishments and bank account seizures. If you are drowning in debt, bankruptcy is the only legal opportunity to discharge most or all of your unsecured debt. Bankruptcy also allows debtors to keep many assets and even some cash that will be needed to help them get a fresh financial start.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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