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If your debts have spiraled out of control, or are heading that way, the very worst thing you can do is nothing. If debt recovery agencies get involved, or you get a court order against you, things can go from bad to unbearable.
To help avoid things getting much, much worse you should immediately contact all financial creditors and let them know the state of things for you at the moment. Make sure you outline all your other debts to them so they clearly understand your situation.
Make no mistake, no financial institution wants to end up with a bad debt that can’t be repaid, and most (if not all) will be willing to work with you to help you pay back your debt over time. Talk to them about what you feel you can afford to repay from each pay. If you can repay any amount upfront as a lump sum, this will go a long way to demonstrating to them that you mean business.
Working together like this can also help protect your credit rating as they may not file against you as you are not ignoring the situation. A word of warning though, do not under any circumstances miss any payment you have agreed upon. If your situation changes again, make sure you communicate with your creditors ASAP.
Remember, effective communication is the key to getting things under control. Most financial institutions would rather get $5 per month for the next 10 years that end up with a bad debt that can’t be repaid.
