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If you find yourself in a situation where you are unable to pay your bills on time, one of your best preliminary options is to contact your creditors and speak with them directly. By doing this you can come to mutual arrangements before they start hounding you for money.

It is a good idea to find out which bills you can pay first before starting any negotiations. Also check which payments are almost due. This should help you to arrange your finances and prioritize future payments.

Work Directly with Your Creditors

Most creditors prefer to deal with a debtor rather than passing their account to a debt collection agency. They would also prefer to steer you away from declaring bankruptcy if at all possible.

In the event that your creditors are open to negotiations, you need to see if you can work out a way to settle your debts. If you can hammer out an arrangement that is workable for you and the creditor, below are a few hints to help make the process more smooth.

Four Recommendations

* Ask your creditors if they will allow you to make a repayment plan and break down your debts into installments. This can spread your debts over a longer period of time. You must obtain a copy of your agreement, however, and ensure that it does not leave you in a permanently overdue state with your payments. If this happens your credit rating will suffer.

* Be aware of credit card scams. Some collectors try to mislead people about their balances and payments. Be cautious and review your statements to make sure you are actually paying what you agreed to. Don't divulge any personal details, such as your employer, bank, or credit card information without good reason.

* Use certified mail to pay your debts. That way you will have proof of every payment you make. Be sure to keep all proof of delivery somewhere safe and where you can easily get your hands on them if needed. Having proof of payment on hand will save you hours of work and anxiety if your prior bill payment is ever questioned.

* Don't make promises that you cannot keep. Be open and honest with your creditors and keep them informed of any changes in your finances. This can save you money in late payments fees. If you find yourself in additional and unanticipated adverse financial circumstances which prevent you from following through on the agreement, contact the affected creditors immediately and seek a little more flexibility.

Follow Through is Key

If you do successfully negotiate new terms with your creditors, ask them for a written copy of the new terms as part of the discussion. Also do your very best to adhere to these new repayments or you will find yourself in a worse situation than you were before starting.

Creditors do want to help you, but you must also help yourself out of your debt by tackling the problem forthrightly. Talking with your creditors is your first step to financial repair and to a more stress free lifestyle.