A beginner’s guide to speaking with creditors

If you find yourself in a sticky situation when it comes to debt, it’s not always easy to discuss this with friends or family - least of all a stranger at the bank. Even though speaking to creditors about missing payments can be intimidating, it’s essential if you want to take control of your finances. We've compiled a list of tips to guide you through the process clearly.

If you know that you won’t be able to make your monthly payments, you should get in touch with your creditor as soon as possible to discuss your options.

Depending on your situation, your lender may be able to offer you a debt consolidation loan, or you could refinance your debt and negotiate better terms. If you’re proactive, you can avoid missing payments and protect your credit score.

It’s a good idea to visit reputable websites such as the National Credit Regulator or your lender’s website to learn about your options before you start the conversation.

You can also log into your ClearScore account to find free Coaching plans and a wealth of useful information to help you get on top of your debt. Being well informed will give you the confidence to speak up and ask the right questions.

Your lender may be able to offer you a payment holiday for up to three months, which will give you a bit of breathing room while you sort out your personal finances.

Be sure to ask them about the impact of a payment holiday on your credit score and how they intend to report it to the credit bureaus. If you have multiple small loans, it’s worth asking your lender about a debt consolidation loan with a lower monthly repayment than your current costs.

Compile a list of your financial information so that you have it on hand should your lender request it. Make sure to include your list of debts, assets, loan agreements and your monthly budget.

The most important thing is to be open about your situation so that your lender knows how best to assist you.

Remember to check if you have credit insurance on any of your loans and if so, what this policy covers. (Credit insurance pays off an outstanding debt in the event of death, disability or loss of income.)

If you’re feeling nervous about contacting your lender, you can reach out to a debt counsellor for help (it’s free).

After reviewing your financial situation, a debt counsellor will contact your creditor to negotiate a new payment plan on your behalf. If you’re unable to repay the full amount of your outstanding debts, the debt counsellor could negotiate a debt settlement discount for you.