A Creditor is someone you owe money to, for example, a credit card provider, a loan, or a bill.
If all your debts are getting too much to handle, there are plenty of options to help you take care of them, but one of the simplest ones is simply making contact with your creditor.
When a creditor signs you up to a contract, it may seem as if there is no way out. However, creditors often want to help you, rather than have you miss a payment and have to follow you up.
By contacting a creditor, they may help you with leniency on your amount owing by:
- Reduce your scheduled payments, by extending your payment plan;
- Reduce your interest rate to help you get on top of your debt;
- Offer to pay out your debt for a reduced amount, up front;
- Defer your required payments for a specific period of time.
To request leniency from a creditor, they will want to know why you are unable to meet your obligations. To satisfy this, get your financial documents in order to be able to prove your financial hardship. Some documents that will help you outline this are:
- Your recent tax return;
- Your recent pay slips;
- Your recent bank statements;
- Any Centrelink benefit notices;
- Any other documentation that supports your claim.
Finally, write a letter outlining details of why you are in financial hardship. List all of your living expenses and commitments, and any other debts you need to pay off, and why your pay doesn’t allow you to cover all of these expenses. Finish the letter off by asking for leniency, and your proposed terms for paying off the debt in full.