In financial hard times, be frank with creditors

A Washington County consumer wrote Consumer Forum with a problem that happens all too often when people and families fall on hard financial times. Her experience provides a valuable lesson about the basics of consumer-merchant relations. We need the goods and services merchants have to offer. They need our business. Mutual trust and good communication should occur not only at the time of sale, but when things get rocky as well.

In our example, the client had purchased a television set for $395. She contracted for a payment plan with $35 monthly installments. Shortly after the sale our Down East consumer ran into serious financial difficulties and found that she could not maintain the payments. She did exactly the wrong thing: She let the payments slide.

After missing four payments, she received a call from the store manager, who asked what was wrong. The client explained her money problems but stated her intentions to settle the account. The manager offered to work out a new payment schedule that the client could handle. After examining her budget and the manager’s suggestions, the client agreed that she could handle the reduced amount and new schedule of payments.

Later still, we received a letter from the client praising the business for understanding her plight and being so willing to help. She was happy. The merchant was happy.

This example clearly demonstrates the need for open, honest, and sometimes painfully frank communication between seller and buyer. The client might have saved herself many hours of worry had she called the store and explained her situation before missing the first payment. If she had done so, she would have realized earlier that the store was willing to help. Her lingering fears would have been soothed with this assurance. Anxiety just makes everything worse.

People naturally try to avoid a potentially unpleasant situation rather than face a scene or embarrassment. Admitting that money is tight is embarrassing, but getting to the point where you are receiving dunning notices, letters of demand, threats of repossession and negative entries on your credit rating is even more embarrassing. In most cases a store owner or manager will be delighted to discuss alternative payment schedules and amounts when a customer is experiencing hard times. The store would much rather see smaller payments coming in than no payments at all.

Failure to notify a store when you are unable to honor a commitment actually makes things worse. If the retailer doesn’t hear from you, he or she may have no alternative but to assume that you are a deadbeat. With many accounts to follow, most stores would not take the time to make a personal phone call like the store in our example did. Our client was lucky that the merchant didn’t just hand the account over for collection or repossession. Merchants aren’t mind readers, so unless you tell them, there is no way they can know you are having money problems. No one could fault them for taking action if they are left in the dark.

The same basic rules apply if you owe a credit card company, bank, or credit union. If you fall on hard times, give them a call immediately. They, too, would rather negotiate a way for you to pay off your debt. It is much cheaper to do that than all the upsetting alternatives. So if you are in a bind, pick up the phone and make the call. You may find you have a friend at the other end.

Consumer Forum is a collaborative effort of the Bangor Daily News and Northeast COMBAT. Send questions to Consumer Forum, Bangor Daily News, P.O. Box 1329, Bangor, Maine 04402-1329. COMBAT is a nonprofit organization with annual dues of $10. For membership information, write to the above address.