Automobile loans problems and Dealing with Creditors. Avoid a negative entry on your credit report
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Dealing with Creditors
A sudden illness or the loss of your job may make it impossible for you to pay your bills on time. Whatever your situation, if you find that you cannot make your payments, contact your creditors at once. Try to work out a modified payment plan with your creditors that reduce your payments to a more manageable level. If you have paid promptly in the past, they may be willing to work with you. Don't wait until your account is turned over to a debt collector. At that point, the creditor has given up on you. Most creditors don't want to spend time and money to collect delinquent accounts - all they want is their money! Therefore, in most cases, your creditors will be willing to work with you through your crisis.
For example, you may want to offer your creditor interest payments on your debt and delay payments on your principal until your condition changes. Also, check to see whether your debt is covered by a payment protection plan or other insurance that would pay your debt. In some cases you may be able to get your creditor to accept a partial payment as satisfaction in full for your debt. In any event, you want to keep an open dialogue with your creditor keeping the creditor abreast of your situation.
If you do work out a debt-repayment plan, ask your creditors to report your new, smaller payments to the credit bureau as timely. Otherwise, the credit bureau may report these payments as delinquent because you are paying less than the amount agreed to in your original credit agreement.
Automobile loans may present special problems. Most automobile financing agreements permit your creditor to repossess your car any time that you are in default on your payments. No advance notice is required. If your car is repossessed, you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. If you cannot do this, the creditor may sell the car. Don't wait until you are in default. Try to solve the problem with your creditor when you realize you won't be able to meet your payments. It may be better to sell the car yourself and pay off your debt. This would avoid the added costs of repossession and a negative entry on your credit report.
"Dealing with Creditors."
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