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Tennessee Department of Commerce & Insurance Shares Financial Planning Tips Ahead of National Financial Awareness Day on Aug. 14 - tn.gov

Agency Shares Tips Related to Facing Financial Challenges

NASHVILLE — Ahead of National Financial Awareness Day on Saturday, Aug. 14, 2021, the Tennessee Department of Commerce Insurance’s Division of Regulatory Boards is sharing new financial planning tips to help Tennessee consumers build a stronger financial future and prepare in case of emergencies.

“While most of us pay our bills on time, there are unavoidable times when life happens and financial challenges may occur,” said Roxana Gumucio, executive director for TDCI’s credit and debt collection boards. “Rather than ignore a difficult financial situation, we urge consumers to make a plan today and prepare how to handle a situation head-on.”

TDCI oversees the licensure of credit and debt collection professionals through the Collection Service Board, Debt Management Program and the Credit Services Business registration program. Joining in the recognition of National Financial Awareness Day, Director of Investor Education for TDCI’s Securities Division Rachel Carden has published a new blog post devoted to the importance of financial planning.

TDCI reminds consumers to remember the following tips:

Ask questions. Before you contact any of your creditors, first ask questions and determine the severity of the situation. Is this situation temporary or permanent? What resources (emergency funds, unemployment benefits) can you access? Document the answers to the questions and make the necessary revisions to your written budget as well. This information will be helpful if and when you start contacting your creditors.

Contact your creditors as soon as possible. Be honest with your creditors about the severity of your situation. If you are only five days past due on payments, they may have more options available than if you are 30 days past due on your payments. Once you have explained your situation, work with them to determine a path forward: Do they offer deferments or interest-only payments? Do they have a forbearance program? Can they refinance your account at a reduced interest rate or payment? Will they consider settling debts for less than the balance owed? Be sure you are speaking with a representative who knows the answers to these questions. If not, politely ask to be transferred to someone who does.

Cooperation is key. If they are offering to work with you, make every effort to cooperate with them to the best of your ability. It is important to establish a good relationship at the beginning in order to achieve the desired result at the end. If your creditors offer some type of hardship program, they may require documentation of the hardship such as an unemployment check stub to verify your current income or evidence you were laid off. They may even ask for a list of your current creditor payments and balances. (This is a perfectly reasonable request.)

Document your contact history. It is important to keep track of your conversations because with many large companies you will rarely speak with the same person twice. When you contact your creditors, take notes about who you spoke and what you discussed during your call. Make note of the date, time, the name and position of the person you spoke with and what was discussed or offered.

Reaching an agreement. If your situation results in a permanent change and your income is now coming from a settlement, a retirement plan or some similar way, you may want to settle some of your obligations with a reduced, lump sum payment. Determine the full amount you owe and consider offering a percentage of that amount for the creditor to settle the debt and determine that it is paid in full. They will likely counteroffer at a much higher percentage, but you can continue to negotiate until you reach a percentage you feel is reasonable.  

Once you have reached an agreement, request a confirmation in writing and make sure it includes the following before making a payment: 

  • The agreed upon amount is being accepted as payment in full of the debt.
  • The creditor will reflect in your credit report at all three credit reporting agencies that the debt was settled and nothing more is owed.  
  • The method and date by which they will require the payment be made. (For example, payment by cashier’s check or money order to be received no later than 9/30/2021).  
  • Keep this written verification as well as a copy of the payment you submit in case you have any future issues regarding the debt.
  • If you are negotiating a change in the payment arrangements on an account, ask for a confirmation of those in writing as well. 

Be careful of any advice you receive. Your co-workers, family or friends may have good intentions, but their experiences may not apply to your specific situation. Internet research can be very helpful, but consider the credibility of the source before making a financial decision. Debt management and credit repair companies can also be good resources, especially advice from nonprofits. This is not to suggest that those companies who operate for profit are bad, but you need to be aware of their costs, terms and stipulations. Before utilizing a service, you should be comfortable that the services that will be provided will meet your needs before utilizing their services. Remember: If it sounds too good to be true, it probably is. 

Finally, do not give up! It may take time to get back to a strong financial footing, but if you believe in yourself and stick to your plan, you can achieve your goals.

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