Talk to a Creditor About Loan Forbearance: A Step by Step Guide

The coronavirus pandemic has led to a recession which has driven record unemployment. And now, many Americans are wondering how to manage their household finances, including their credit card payments and loan debt.

In a 2019 Freedom Debt Relief survey, 79% of respondents said they have debt, including credit cards, personal loans, and mortgages, and it was hard to stay on top of it. In the same survey, 25% of Americans could not pay off their credit card right away after purchasing groceries and food. Since 2019, things have only gotten harder, so loan forbearance could give you some much needed slack during tough times.

What is credit card or loan forbearance? The term simply means you are asking for more time to pay debt by temporarily skipping payments, or by paying less or no interest. If you are experiencing financial hardship, this step-by-step guide to talking to your creditor about loan forbearance could help. Although many creditors are offering expanded assistance due to the pandemic, this guide could work for other circumstances as well, like a government shutdown, medical emergencies, or natural disasters.

Step 1: Make a list of lenders you need to talk to

First, make a list of lenders and creditors you need to talk to and prioritize the list. Which payments would be more helpful to defer right now? Those lenders should be at the top of the list. If you need to skip a payment, it’s a good idea to talk to your lender as soon as possible.

There are a few ways you can receive assistance including:

• Monthly payment deferral

• Waived late fees

• Waived interest

Some creditors might have established what type of assistance they can offer while others may offer more flexible solutions on a case-by-case basis. If it’s the latter, have an idea of what you’d like to do about your loan forbearance and ask if it’s a possible solution.

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Step 2: Get your documents together

Next, make sure you have the information you’ll need before you call or email, including:

• Account ID number

• Personal identifier (social security number, date of birth, address, etc.)

• Total amount owed

• Minimum or monthly payment

• Payment history

• Interest rate

• Number of years you have been a customer

Knowing these details ahead of time can save time and make it easier for you to find out if and how your creditor to give you the help you need.

Step 3: Schedule who to contact and when to follow up

After you gather your documents, set up a plan for whom to contact and when to follow up. You can do this using a calendar, planner, or your own version of a customer service call tracker. If you plan to make phone calls rather than using email, a call tracker can keep you organized, especially if you plan to call multiple creditors.

Create a spreadsheet with a table like this:

Since the customer service representative may give you a lot of information during the call, it’s important to take notes, including the date, time, and company contact information. Once you are able to negotiate forbearance terms, make note of it in the comments along with the name of the rep and an ID number, if it’s available.

Plan to follow up within three business days and again in one week if you haven’t heard from your creditor. Jot down each time you initiate contact so you have a timeline of communication.

If you use email, you can set up a separate folder for the correspondence, but it might be helpful to keep a running spreadsheet with all the information and notes as well.

Step 4: Decide whether to email or call

Once you have a schedule of who to contact and when to follow up, decide whether to email or call. Creditor websites will sometimes list the best methods to contact them, including phone, email, or live chat.

A phone call may be easier than a written format in some cases, because you can convey more with your tone of voice. Plus, it may be a faster way to get an answer on your loan forbearance options.

A paper trail can come in handy if your creditor is best reached by email. Written correspondence is helpful if a creditor changes the terms or doesn’t follow through. This format works well, for instance, if you need to talk to your landlord about skipping a rent payment.

Step 5: Have a list of questions

Next, have a few questions ready before you talk to any creditor. It’s easy to get into a state of panic and jump on the phone or shoot off an email without thinking through all of the scenarios, so writing down questions first can save you time and trouble. Here are a few important questions to ask:

• Will I be charged interest during forbearance?

• How long will the forbearance period last?

• What criteria do you use to grant forbearance?

• Does the forbearance period extend the life of my loan or is the payment due immediately after forbearance ends?

Step 6: Use a script

Lastly, using a script can help ease the anxiety of negotiating loan forbearance with your creditors on the phone or in person. Consider using one of the scripts below and fill in the blanks with your own information.

“Hi there, I’ve been a customer for [insert number of years] with [company name]. I am experiencing financial hardship due to [pandemic, medical reasons, etc.]. What options do you have for those in financial hardship?”

If you have an idea of how long you need loan forbearance, you can include more specific requests in your script. Here’s another example:

“Hi there, I’ve been customer for [insert number of years] with [company name]. I am experiencing financial hardship due to [pandemic, medical reasons, etc.] and cannot make my payment. What financial relief options do you have over the next [number] of months?”

If the creditor won’t budge, try asking, “How would you suggest I make my payments during my hardship?” Asking “how” encourages the other person to step into your shoes and work with you to find a solution.

How you phrase the question is almost as important as the question itself. A positive, upward inflection of your voice can convey curiosity (question); a downward inflection sounds more defensive (statement). Do your best to stay neutral and curious with your voice, even in this very stressful interaction.

These six steps can make asking for loan forbearance a little less difficult. As long as you are honest and show that you want to work with your creditor, they are more likely to help you find some breathing room with loan forbearance.

If calling creditors feels overwhelming…

Debt and money issues can feel stressful and isolating, but you don’t have to deal with your creditors alone. The Certified Debt Consultants at Freedom Debt Relief are here to listen to your financial story and offer guidance on all your debt relief options without judgment. See if you could qualify for our debt relief program.

Learn more:

• Should You Borrow Money from Friends and Family in Hard Times? (Freedom Debt Relief)

• Who Can Check Your Credit? (Freedom Debt Relief)

• Exactly What to Say if You Can’t Pay Your Rent, Student Loans or Credit Card Bills (CNBC)