Facing financial uncertainty can be difficult.  Doing nothing about the bills that are due may be our default choice.  Unfortunately avoiding rather than facing the reality of our financial situation can cause bigger challenges in the long run.     

During difficult times, we we can our twelve character traits to find our way through.  Character traits are the qualities we have available within us to create our lives.  We can call on confidence to move from fear to courage.  We can call on belief to move from not knowing to knowing and identifying what we need.

The next character trait we will focus on is desire.  Desires define what we need and motivate what we do.  If I am not aware of what I need to do, I am more likely to stay stuck and not do anything.  We can stay stuck in debt when the desire to avoid action is stronger than the desire to move forward.  “To stay stuck” or “to move forward” is a decision.

We are each endowed with the “Right of Decision.”  By giving conscious attention to our thoughts and feelings, we can create a plan to choose how to guide our actions to move forward.    

The “Right of Decision” for what I will do as an individual is endowed within and resides within me.  The “Right of Decision” for what the creditor will do resides with the creditor.  When all involved participate in choosing what to do, there is the best chance to move forward in a mutually acceptable way.

We can find our way through this time of financial uncertainty if we desire to move forward and consciously choose to take actions that will move us forward. 

Create A Plan For Communicating With Your Creditors

Your plan for communicating with your creditors will include letting them know what you have the ability to repay.  It will also include deciding how you will contact your creditors.

In “Making Ends Meet”, you determined the amount of income you have now since your income has decreased.  You also identified the amount of money you have for essentials such as food, utilities, housing and transportation.  The money left over is what is available to pay creditors.  

If you do not have enough money to make your minimum monthly payments, there are several options for approaching your debt.  The options vary according to how much you owe and how involved you want to be in communicating with your creditors.

Option 1:  You may decide that you want to contact each of your creditors to work out a repayment plan.   Before you contact your creditors, know what you owe, have a suggestion for what you can repay each creditor, and when you can repay it.  They may or may not be willing to negotiate but you can ask.  There are several options for organizing your debt management proposal. 

Method A:  You could propose paying creditors equal amounts.  

Method B:  You could propose paying back the percentage of total debt obligation represented by each individual debt.

Method C:  A third method is to pay back according to the action the creditor may take.  Here are some questions to help you think about what actions your creditors might take and choose which creditor to contact first. 

• Have you pledged collateral for a loan?  If so, you could lose your collateral?  If you have a home mortgage the lender could foreclose.  If you have a car loan, your car could be repossessed.
• Will the service be cut off if you don’t pay?  Examples are utilities and insurance.
• What are the APR’s (annual percentage rates) and fees for late payment?  Can your interest rates be lowered or late fees waived?  
• How long is the grace period?  A longer grace period may give you time to come up with more money.
• Can the payment be deferred until a later time?

Option 2:  If your debt seems overwhelming, you may wish to meet with a financial counselor at a nonprofit organization.  The counselor can help you lower interest rates and late fees, stop collection calls, and combine monthly payments into one smaller monthly payment.   You can contact the National Foundation for Consumer Credit (NFCC) for a referral.  Contact NFCC at https://www.nfcc.org/ or call 1.800.388.2227.       

Option 3:  Your debt may be to the point that you want to meet with an attorney to consider legal options.  The Federal Bankruptcy Code provides consumers with two ways to eliminate or reorganize overwhelming debt – Chapter 7 and Chapter 13.

Chapter 7 is the straight bankruptcy provision.  It provides for liquidation of most of your unsecured debts such as credit cards and medical bills.  You must meet certain income requirements.  If you make too much money, you will have to file Chapter 13.  With Chapter 7, the secured creditors may have the collateral returned to them unless you assume the debt with the court’s approval.  The Georgia Homestead Exemption allows you to keep some property up to certain dollar amounts.   

Chapter 13 is a debt repayment plan.  It is generally used when the value of things you own is greater than the Georgia Homestead Exemption amount.  You set up a repayment plan that is court approved.  The plan tells how you will pay your debts, how much each creditor will get, and how long your plan will last.  The plan must follow what the law allows. Your income determines how long your plan lasts.  Plans generally last three or five years. 

Bankruptcy has long-term financial and legal outcomes.  Therefore, if you think the legal option is the choice for you, consider choosing an attorney who specializes in bankruptcy to assist you.  

Summary   

Facing financial uncertainty is not easy, especially when we have more bills than income.  There are several options we can choose to keep moving forward.  You may feel that you can develop a plan and negotiate with creditors on your own.  If you prefer to have outside assistance, then perhaps you may want to consider working with a non-profit credit counselor or an attorney.  

Whatever our choice for approaching our creditors, we know that we can call on our courage to know and define what we need to do to move forward.  

By connecting within, I identify and define what I need to do.  By connecting and  communicating with others involved, together we can create solutions that are mutually beneficial to all.