Which Debt Should I Default On First?
The best approach to defaulting on debts.
Laura Adams, MBA
Reader Melissa D. asks:
I lost my job in November and had to stop paying for my house, but all my other accounts are current. I’m okay with letting my home go because I owe substantially more than it’s worth. If I have no choice, is it better to default on my second largest debt each month, which is a line of credit with a $577 minimum payment, or on several smaller accounts?
Answer: The best approach is to contact each of your creditors and ask to speak to their accounts receivable manager or in-house debt adviser and let them know your situation.
Be polite but firm. Let them know you are looking for work, but won’t be able to make all your debt payments for some time.
Be clear that you are in the process of choosing which debts to pay and which to default on. If they understand that you won’t be sending them any money unless they make concessions, you may be surprised at what they’re willing to offer. Read More »