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

If you need a little breathing room on your debt, loan forbearance could be the solution. Loan forbearance is an agreement to put payments on hold when a borrower is going through financial hardship. If the creditor approves, you get a break from making your full loan payments, and the opportunity to get back on your feet.

The idea of calling up a creditor about a break on your loan may be nerve-wracking. That’s completely normal. Most of us don’t have much experience speaking with creditors. Talking  about money troubles and asking for a hand can be stressful.

When you need help, reaching out to your creditor immediately is often the best decision you can make. Creditors usually prefer working with borrowers who communicate proactively in this situation–ideally before missing any payments. They want you to pay back your loan or credit card debt, and they could be willing to work with you to make it happen.

Forbearance options depend on the creditor. This type of debt relief may include a complete pause on loan payments, interest-only payments, or payments that only cover a portion of your monthly interest charges. The last one means the unpaid portion of your interest typically gets added to your loan balance, so you’d end up owing even more at the end of your forbearance.

If loan forbearance sounds like a realistic option for your current situation, our step-by-step guide covers what to do first and exactly how to talk to creditors. There’s no guarantee that a creditor will agree to forbearance, but you can at least give yourself the best chance of success.

1. Make a List of Creditors to Contact 

Go over all your debt payments to make a list of the creditors and lenders you pay every month. Next, prioritize the list. Ask yourself: Which payments would be most helpful to defer right now?

You may want to focus on the largest monthly payments, because if you can get forbearance on those, you free up more money. Or you might want to ask about forbearance for loans with lower interest rates, since those won’t cost you as much in interest if you keep them around longer.

You could also prioritize based on how important the debt is to you. For example, you might want to keep paying your mortgage but ask for flexibility with your credit card account.

Loan assistance varies depending on the creditor. Options may include:

• Monthly payment deferral

• Waived late fees

• Waived interest

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

Different types of forbearance programs

A forbearance program can refer to several different types of loan assistance. Options may include loan forbearance, deferment, or modification, depending on your needs and what the creditor offers. Here’s how each one works:

• Forbearance. The creditor temporarily pauses your payments or reduces your payment amount. Creditors usually continue to charge interest during forbearance, so your loan balance could grow during this time. Forbearance periods generally last up to 12 months.

• Deferment. The creditor temporarily pauses your loan payments. Deferment sometimes includes a pause in interest charges, depending on the type of loan and the creditor. Loan deferment can last for years—the creditor decides based on the circumstances.

• Modification. The creditor changes the terms of your loan. A loan modification could apply to the interest rate, the length of the loan, or even the principal amount.

Generally speaking, forbearance provides short-term assistance and deferment is for long-term help. Modification is a permanent change in the terms of your loan. There’s some overlap between these terms, so always get the details on exactly what your creditor is offering.

Hardship assistance is available with most types of debt, including mortgages, personal loans, student loans, and auto loans. Assistance options vary from lender to lender, but lenders are often willing to work with people who are going through a tough time.

To figure out which option best fits your situation, think about how much help you need. If money is just a little tight due to a temporary issue, forbearance could be the way to go. You could have your payments paused or lowered for up to 12 months.

If you have a severe financial issue, then you may want to ask about deferment. Deferment normally lasts longer than forbearance and might also put a pause on interest charges. And if your financial situation has changed to the point where your original loan terms no longer work for you, ask about loan modification.

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2. Get Your Documents and Information Ready

Talking to creditors is much easier and more likely to go well when you’re fully prepared with all the documents and information you need. Since you’re requesting loan forbearance, your creditors will almost certainly want details on your financial hardship and your plan going forward.

Here are the steps you can follow to be ready for each phone call:

• Create a complete financial snapshot including your income and expenses. With this snapshot, you’ll be able to quickly summarize your financial situation to creditors. You may want to go over banking and credit card statements for the last few months to make sure you’ve accounted for all your expenses.

• Document your hardship with supporting evidence. For example, if you recently dealt with a big emergency medical expense, have the bill on hand to send to creditors. Evidence of your hardship shows that you legitimately need assistance.

• Prepare a realistic budget to show creditors. When you provide a budget, creditors can get a better idea of how much you can afford and hopefully find a forbearance option that fits your needs. A budget could also help you better manage your money.

• Have recent statements and payment history ready. If you’ve normally made your payments on time, it doesn’t hurt to mention that on your call.

If you know these details ahead of time, you’re probably going to feel more relaxed when you contact your creditors. You won’t need to dig around for information, making it easier for you and your creditor’s hardship department.

3. Schedule Who to Contact and When to Follow Up

After you gather your documents, set up a plan for who 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.

Since the customer service representative may give you a lot of information during the call, take notes, including the date, time, and company contact information. Once you’re 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. It might still be helpful to keep a running spreadsheet with all the information and notes, as well.

4. Decide How to Contact Your Creditors

Once you have a schedule of who to contact and when to follow up, decide how you’ll reach out. You can find a creditor’s contact information on its website or on your monthly bill. Contact methods may include phone, email, and live chat.

A phone call could be easier than writing, because you can convey more with your tone of voice. It may also be a faster way to get an answer about your forbearance options. In the best-case scenario, your creditor could approve you for loan forbearance in one phone call.

If you make a verbal agreement on a phone call, always make sure to get written confirmation. Ask the representative you speak with to send you confirmation of the agreement by email or mail. If you don’t receive anything, follow up yourself. Write to the creditor and explain that you’d like to confirm the details of the agreement you made, and list all the terms of the agreement in your message.

Emails and live chat both leave a paper trail, so you typically don’t need to follow up like you would after a phone call. 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. Email in particular gives you time to gather your thoughts before each message, so there’s less pressure than a phone conversation.

When you need confirmation that a creditor received your message, the safest option is to use certified mail. You’ll get verification when delivery is made. Keep a copy of what you sent, as well. Certified mail is useful when dealing with debt collectors, but it can also work well with important correspondence sent to creditors.

Maintain organized records of all communications with creditors. Modern technology has made this much more convenient. You could save all communications to a folder on your computer, an online cloud service, or better yet, both. You can do this with notices you receive in the mail, too. Use a scanner or, if you don’t have one, there are plenty of scanner apps that work with a smartphone.

5. Create a List of Questions

Before you talk to any creditor, write down a list of the questions you want to ask about loan forbearance options. This way, you can ensure you get all the details you need in the first call, email, or live chat session. Here are a few questions you may want to put on your list:

• 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 a larger payment due immediately after forbearance ends?

6. Use a Script

If you’re going to call creditors, a simple way to help ease any anxiety is to make a script you can follow in the beginning. You’ll be able to go into your call with confidence and no worries about getting tongue-tied. Here’s a quick script option—just fill in the blanks with your own information.

“Hi there, I’ve been your customer for ___ years. I’m having some trouble keeping up with my payments due to [a temporary slowdown at work, medical reasons, etc.]. What options do you have for those in financial hardship?”

If you have some 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 a customer for [number of years]. I’m going through financial hardship due to [a temporary slowdown at work, medical reasons, etc.] and can’t make my payment. What financial relief options do you have over the next [number] 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 may be 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). Even in this stressful interaction, do your best to keep your voice neutral and curious, so that the person you’re speaking with may be more willing to help you.

When You Talk to Creditors, Don’t Do This

Before you call your creditors, it’s also good to know what not to do. You don’t want to make your situation worse, and there are some common errors people make here.

Avoid promises you can’t keep, like a payment plan that’s beyond your means. If you can’t afford the terms that a creditor offers, be honest. Explain that the proposal doesn’t work with your budget, and suggest an alternative that does. Some people feel pressured to accept a deal and finish the conversation, but this doesn’t do you or the creditor any good. You could end up in the same situation, only the next time around, the creditor may be hesitant to approve another loan forbearance.

Don’t rely on a verbal agreement alone, because you won’t have any hard evidence of the deal you made. There’s always the possibility of a miscommunication or an agent forgetting to make a detailed record of your conversation. Ask for written confirmation so you have proof of the agreement and to verify the terms.

Conversations with creditors can be stressful. Even when you’re feeling stressed, always stay calm and professional. When you have a pleasant demeanor, creditors are usually more willing to work with you and look for solutions.

What Happens if Creditors Won’t Work With You

Creditors may deny forbearance requests from people they consider high-risk borrowers. For example, if you’ve missed payments in the past or have a low credit score, a creditor might not be comfortable approving you for loan forbearance. Also, not all creditors offer forbearance programs.

If a creditor denies your forbearance request, you could try:

• Reworking your budget to figure out if you can manage your payments.

• Debt consolidation with a personal loan or a home equity loan.

• Settling your debt for a lower amount.

The right solution generally depends on the severity of your situation. A budget makeover or debt consolidation are both options that work well with manageable debt or when you don’t have too much of a shortfall. If you’re really struggling with debt, then debt settlement could be the better way.

A debt settlement involves negotiating with your creditors to accept less than you owe on your debt. You can handle the negotiations yourself, or you can enroll in a debt relief program for professional help. While either method could work, if you use a debt relief company, you won’t need to talk to creditors. Experienced professionals negotiate on your behalf, and they’ll work to get settlement offers from your creditors. Then, you decide which offers to accept—learn how debt relief works if you’re interested in this method.

In some cases, debt settlement might be a better solution than forbearance. If you’re behind on payments, then you could have a hard time qualifying for forbearance in the first place. Debt settlement, on the other hand, doesn’t require that you’re caught up on your payments. Creditors often are only willing to negotiate a settlement if your account is past due. You may also want to go for debt settlement if a temporary pause or reduction in payments won’t be enough to fix your financial situation.

Get Professional Guidance on Your Debt Relief Options

You could follow those six steps to call creditors and ask about loan forbearance. If you show that you want to work with your creditor, chances are they’ll most likely want to work with you, too. You don’t need to deal with creditors alone. Another option is to work with a debt relief company.

If you’d like help with your debt, the Certified Debt Consultants at Freedom Debt Relief are here to listen to your story and offer guidance on your options. They can also deal directly with your creditors for you.

Freedom Debt Relief has served over 1 million clients and resolved over $20 billion in debt since its founding in 2002. Check out what makes Freedom Debt Relief special to learn more. Find out if you qualify for our debt relief program today to get control of your debt and build a better financial future.