When you are having financial difficulties, it is always a good idea to contact your creditors. And if you know you're heading for hard times (you're being laid-off or are about to be treated for an illness), contact your creditors in advance to let them know.

Your creditors don't want to call and harass you or take you to court. These actions are expensive and time-consuming for them. They simply want their money. If you can give them reasonable assurances that they will get their money eventually, they will usually try to work with you.

There are many kinds of arrangements your creditors can make. They can defer your payments for a few months, if your problems are short-term. (The interest will still accrue, though.) They can restructure your debt, so that you pay a smaller amount each month over a longer period of time. If your creditor is a bank, they may even be able to make some suggestions about debt consolidation or restructuring.

SUGGESTION: If you reach an agreement with your creditors, get it in writing! It is very difficult to prove that an oral agreement exists.