With rising interest rates and softening property values pushing more property owners toward default, a leading expert in distressed debt is emphasizing that the timing of communication with a lender can determine the range of options available to borrowers. Jack Miller of Gelt Financial LLC argues that the conventional view of foreclosure as an adversarial process causes borrowers to misread their situation, often leading them to delay contact until it is too late.
According to Miller, borrowers who contact lenders five to ten days before a missed payment—with a clear explanation and a concrete proposal—are treated as partners, while those who wait for the lender to initiate contact are treated as problems. “You have much more credibility if you call today than waiting 30 days for the lender to chase you down,” he 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 acknowledges their obligation while presenting a plan demonstrates qualities that make a lender willing to work favorably. “The lender knows you care, you respect them,” Miller says. “It’s tremendous credibility.”
In contrast, a borrower who waits until the lender has sent notices, made collection calls, or initiated legal proceedings has forfeited that credibility. Even if the borrower’s financial situation is identical to that of a proactive caller, the lender’s perception differs sharply, and that perception shapes what gets offered.
Early communication unlocks specific arrangements that are otherwise unavailable. Miller describes several concrete options: a borrower three months behind might ask the lender to add missed payments to the back end of the loan and resume normal payments; a borrower who can only make partial payments might propose paying the 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.
Once legal proceedings begin, the financial burden escalates rapidly. Miller notes that a borrower 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,” he says.
Miller frames the tendency to avoid lender contact as a predictable human response to financial stress. Borrowers are often ashamed, anxious, and uncertain, convincing themselves the situation will resolve itself. This optimism is usually misplaced. “It’s not realistic,” he says. The cost of avoidance compounds quickly: every week of silence hardens the lender’s posture, advances legal timelines, and narrows options.
Gelt Financial, which works with borrowers in default, consistently finds that early engagement produces better outcomes than late-stage intervention. 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. Borrowers who reach out proactively retain access to forbearance, payment modifications, and restructuring options that become unavailable once legal proceedings begin. For more information on how Gelt Financial works with distressed borrowers, visit geltfinancial.com/lending.
Disclaimer: This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice.
