#AskanExpert: How Can I Speak to Creditors About Hardship When Starting a New Job?

Q: I’m currently a graduate student and I am a few months behind on credit card payments and loans. I just signed a contract for a job that will start August 1, but I will not get my first payment until August 31. How could I speak to creditors about this?

Dear Reader,

Meeting your financial obligations when you don’t have an income can be very challenging. Now that you are transitioning to a new job, you will have income to start repaying your creditors. How you approach this situation with your creditors will depend on your new financial situation, your debts and your existing relationship with them.

Creditors ultimately want to get paid and they usually want to cooperate with you. It helps when you are forthcoming and honest about your situation, and if you have a solid repayment strategy proposal. It also helps if you have a good payment history with them. If you have missed some payments in the past, you can expect more pressure to bring the account current or to have your accounts transferred to collections, either in their own collections department or with a third party collection agency. If your creditor still has your accounts, you can talk to them directly. If they no longer have the account in-house, you will have to deal with the collection agency.

Before you contact your creditor:

1. Organize your debts, assigning a priority level to each credit card and loan.

2. Figure out how much of the new income you will be able to allocate to pay each creditor.

3. After you know how much you can realistically afford, contact your creditors. Be ready to explain in detail your current situation and your repayment strategy, including how much you will be able to pay them each month.

4. When you are talking to your creditors, ask about any in-house hardship programs they may have to help their clients or offer some options. For instance, you can ask about a temporary reduction in your interests, payments and fees, paying interest only until you can resume payments, deferring your payments or refinancing your loan. If you contact your creditors over the phone, make a note of the date and the person you spoke with and only agree to a repayment plan that you can afford. After you have a verbal agreement, follow up with a letter and keep the information for your records.

Above all, be honest and straightforward when discussing the accounts and your ability to repay. Don’t make any commitments that you feel you might not be able to honor. Failing to keep a commitment to repay could lead the lender or debt collector to be less accommodating in future discussions.

Not all creditors will be willing to cooperate with you. If that’s the case, revise your offer and contact them again. And if the creditors are still unwilling to work with you, I suggest you enlist the help of an NFCC-certified credit counselor. Your credit counselor can help you improve your negotiation strategies and explore other repayment options, like a Debt Management Program. They can also help you review your budget to maximize your repayment ability and attain financial stability. Even if your accounts are in collections, your creditor can help you understand how collections work and prepare you to deal with it successfully. The sooner you reach out to your creditor, the better your chances to get a repayment strategy in place. Good, luck!


Bruce McClary, Vice President of Communications

Bruce McClary is the Vice President of Communications for the National Foundation for Credit Counseling® (NFCC®). Based in Washington, D.C., he provides marketing and media relations support for the NFCC and its member agencies serving all 50 states and Puerto Rico. Bruce is considered a subject matter expert and interfaces with the national media, serving as a primary representative for the organization. He has been a featured financial expert for the nation’s top news outlets, including USA Today, MSNBC, NBC News, The New York Times, the Wall Street Journal, CNN, MarketWatch, Fox Business, and hundreds of local media outlets from coast to coast.

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