Tough Times in Texas
Q: I quit paying my cards, as I lost my job. What can they do to me? I had good credit until then. I just cannot pay. Help.
-F.C.I.
Texas
A: Without knowing more about your specific situation, it is difficult to answer this question. Your age, physical condition and overall eligibility for employment will have a bearing on this situation. You may be eligible for unemployment pay from the government or social security. Otherwise, pound the pavement for a job — any job, even as a Wal-Mart greeter.
Two things right off the bat: Take care of your basic needs first and, if needed, invest in a cheap caller ID machine to screen calls so you don’t have to deal with the stress of collectors. Secondly, do not ever give your personal bank account information or any other account information to creditors so they can set up automatic payments. Horror stories have resulted from that scenario. You do not have to do this, no matter what they say.
It is a shame to see good credit squandered on a minor hurdle. This too shall pass, so try to save face as much as possible.
Type a pro rata letter to each creditor, which essentially asks for a delay of 30, 60, 90 or 120 days on all payments, with a decreased amount of interest during that time. This is only used in a time of job loss or other life obstacle that could prevent timely payment.
The letter should be in standard business format, with date and recipient and sender names/addresses listed at the top. A fourth line should read “Re: INSERT YOUR NAME and YOUR ACCOUNT NUMBER WITH THAT PARTICULAR COMPANY”. From there, address it to “Dear Collection Manager” and explain that you recently lost your job, along with any other relevant setbacks such as health challenges, age, etc. Explain what you are doing to fix the situation, whether looking for a job or awaiting unemployment checks.
Calculate the total minimum monthly payments you owe to all creditors currently and explain that you are simply unable to meet these financial obligations at this time. State that you would like to request a moratorium on payments for the next (30, 60, 90 or 120 days - choose the one that is most appropriate for your situation). Also state that, if possible, you would like to seek a reduction in interest during this time.
Finally, express that you are aware this is an inconvenience for their company, but your basic living expenses must be first priority. You fully intend to repay all creditors as soon as possible, and have enjoyed a good credit record thus far. Ask them to be patient with you as you work through this difficult time and if they have any questions, invite them to call you at a phone number you include at the bottom of the letter.
Thank them for their consideration and then sign it. The letter should be about four or five paragraphs and try to limit it to one page. Keep a copy of all pro rata letters you send.
