The day that you enter into a debt settlement agreement with your creditor(s) can feel like a jubilant, liberating day. The end of the debt tunnel is in sight: you see the “light” of a future without that credit card bill or that hospital bill that has dogged you for months (or even years!). This feeling of happiness can quickly give way to fear and dread when you realize that you are not able to keep your end of the bargain. Whether by your own miscalculations or an event beyond your control, you come to the sickening conclusion that you do not have the funds or assets to pay the settlement amount you previously agreed to pay by the time you agreed to pay it.

Businessman buried under crumpled pile of papers with a help sign

Although this can be an unnerving circumstance in which to find yourself, you must act swiftly and decisively to navigate this difficult situation.

Step One: Figure Out What Went Wrong

If you are going to craft a solution to your situation, it is helpful for you to understand why you are in this situation in the first place. Did you overpromise your creditor? Did you anticipate that you’d receive a big tax refund that never materialized? Did an unexpected illness or family emergency require you to spend the money you had saved up for the settlement? The creditor is likely going to be curious as to why you cannot keep your debt settlement agreement, so it is best to figure out that reason before you make contact with the credito

Step Two: Figure Out What You Can Do

You should next come up with a plan going forward so you can approach the creditor with a solution to the problem. Do you need additional time to pay? Can you make smaller payments, just over a longer period of time? Are not able to pay anything toward your debt? Carefully analyze what it is you can do about your debt with the creditor. When you speak with the creditor (next step), stick to your plan and do not overpromise. If the creditor asks if you can pay a certain amount by a certain date and you know you cannot, it is better to be upfront and honest with the creditor rather than promise to do so and scramble to meet your obligation.

Step Three: Speak with the Creditor as Soon as Possible

As soon as you know how you got into trouble and what you can do to get out of the situation, make contact with your creditor (or have your debt settlement attorney make contact with the creditor). Ideally, you should try to speak with your creditor well before the due date for your debt settlement payment. Explain the situation that now prevents you from following through on your original debt settlement agreement and what you can offer as a resolution to the problem. Expect some negotiation with the creditor, but (again) do not make promises to the creditor you cannot keep. If you are prompt in informing the creditor of the problem and have not had any prior issues with your debt settlement plan, the creditor may be willing to work with you and modify your agreement.

While the assistance of an attorney is no guarantee that you can have your debt settlement plan or agreement reinstated, an Arizona debt settlement attorney who is well-versed in consumer law and who has strong advocacy and persuasive skills can increase the likelihood that your creditor will work with you to resolve your debt through a modified debt settlement agreement.