THE BAD CREDIT BLUES, PART 2

Your part of the conversation should sound something like this, "I lost my job and my only source of income right now is unemployment benefits. I have only enough income to pay my rent and other essential expenses at this time. I am actively looking for a job, and when I acquire a position I will immediately call to make arrangements to pay what I owe. You are welcome to contact me again in two weeks and I will give you an update on my job status." Take notes of the call, including who you spoke with and that person's reaction to the information that you provided. Should the debt collector call you before the two weeks have expired, remind the person calling about the first person you spoke with and that the two weeks aren't up yet. Remember, remain calm and polite, but firm.

If the calls become excessive or abusive, I suggest you screen your calls and don't answer them until you have something new to say. You can write to the collectors and tell them not to contact you again. The calls will stop, but usually this just refers the account to an attorney who will send you a summons to appear in court.

To help your job search, I strongly suggest that you develop a statement for employers explaining why you have charge-offs on your credit report and that you intend to begin a repayment plan once you have a new position. Often employers will pull a credit report as part of the hiring process, and unanswered questions about bad credit can be all that is needed for the employer to move on to the next candidate. Defuse this issue early on, once it is clear you are a serious candidate.

When you are working again, you will need to determine how much you can comfortably afford to pay each month to your creditors and work out a payment plan with them. If you need help, contact a nonprofit credit counseling agency or an attorney that specializes in dealing with debt collectors.