Borrowers who contact lenders before missing a payment receive better options than those who wait, according to Jack Miller of Gelt Financial LLC. The conventional wisdom about foreclosure is that it is an adversarial process, but Miller argues this framing causes borrowers to misread the situation in ways that cost them dearly. With rising rates and softening property values pushing more owners toward default, the single most underused tool available to a distressed property owner is a phone call made before a payment is missed.
Miller, who works with borrowers across commercial and residential default situations, says the timing of communication with a lender is not a minor procedural detail – it is a determining factor in what options remain available. Borrowers who contact lenders five to ten days before a missed payment, with a clear explanation and a concrete proposal, are treated as partners. Those who wait for the lender to chase them down are treated as problems. “You have much more credibility if you call today than waiting 30 days for the lender to chase you down,” Miller says.
In default situations, lenders retain significant discretion over whether to offer forbearance, modify loan terms, defer missed payments to the back end of the loan, or accept partial payment arrangements. That discretion is shaped by the lender’s assessment of the borrower’s reliability and intent. A borrower who calls ahead and says, “I know this is due July 1, I’m not going to be able to make it, here is what I can do,” demonstrates qualities that make a lender willing to exercise discretion in their favor. “The lender knows you care, you respect them,” Miller says. “It’s tremendous credibility.”
The difference between early and late contact also determines which specific arrangements remain on the table. A borrower three months behind might ask the lender to add the missed payments to the back end of the loan and resume normal payments. A borrower who can only make partial payments might propose paying their regular installment plus an additional amount each month until arrears are cleared. “Most lenders will try to work with people,” Miller says, when borrowers “approach the lender with no nonsense, no excuses” and present a realistic plan. These arrangements are only available to borrowers who have preserved their credibility by engaging early. A borrower who has been silent for six months, forcing the lender to initiate legal proceedings, is asking for the same accommodations from a position of significantly diminished leverage, and has added legal costs that make any workout more expensive. Once legal proceedings begin, a borrower who was originally $6,000 behind may need to come up with $15,000 or more once attorney fees are added. “It gets much more complicated and expensive the longer you go,” Miller says.
Miller frames the tendency to avoid lender contact as a predictable human response to financial stress rather than a strategic choice. Borrowers often feel ashamed and anxious, convincing themselves that the situation will resolve itself. This optimism is usually misplaced. “It’s not realistic,” he says. Every week of silence is a week in which the lender’s posture hardens, legal timelines advance, and options narrow. The borrower who might have resolved the situation with a phone call and partial payment in month one is, by month four, facing a situation that requires significantly more money and goodwill.
Gelt Financial works with borrowers in default and, according to Miller, the firm’s experience consistently confirms that early engagement produces better outcomes. The firm encourages borrowers to reach out before situations deteriorate. Miller recommends contacting lenders five to ten days before a missed payment – by phone, email, or both – with a brief, honest explanation and a proposed timeline for resolution. “Whatever happened, I was sick, I was in the hospital, I know it’s due July 1, I’m not going to be able to make this for 30 days,” he says, describing the kind of direct communication that preserves options. As the volume of distressed borrowers grows, the distinction between those who communicate early and those who avoid contact is likely to widen further. For more on how Gelt Financial works with distressed borrowers, visit geltfinancial.com/lending.
