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Ask The Experts: Contact Lender or Ignore Statements Until I Can Pay?

Q. I took out a line of credit about 4 years ago for $40K. The payments are $431 monthly and I currently owe $18k. My wife and I were both laid off but I am the only one collecting unemployment ($430 a week) and I have been paying the monthly payment even after losing my job in January, but it is getting tight.

Should I contact me lender and let them know of my situation or just ignore the monthly statements and wait untill things get better? Thanks, I enjoy watching. - Frank

A. Frank - Is this a line of credit tied to your home? Or a private loan? Either way, don't ignore any monthly statement. Pay the minimum due each and every month and on time and if you just cannot make the payments, call your lender to let them know you're having trouble and cannot make your payment (important to do this only if and when you can't make a payment - not before!).

The lender may be able and willing to modify the loan in several ways, including stretching the loan over a longer period of time and/or lowering your interest rate. The key here is to be proactive about it. If you just let it go, you're not in a good position to negotiate and you can quickly fall to the bottom of the pile, but first to lose in terms of your credit score or even your home (if it's a credit line tied to your house).

So if you just can't make your payment this month or next, call and start the process to work out better terms. Good luck!

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Carmen Wong Ulrich is the host of On The Money