Do you avoid or ignore handling your debts?
Are you holding out for the statute of limitations to pass, or hoping the debt
will just go away? If so, you may want to reconsider. If it’s been months or
years since you’ve made a regular payment on your debts, you’re not in a good
Debt is a serious problem. The average household debt is $137,063, Debtconsolidation.com reports, and credit card debt totaled $978.9 billion in 2016. This debt continues to rise every year.
The cause of the debt crisis? For most
people, it was caused by living beyond their means. Even teenagers admit to
going into debt at an early age just to keep up with their friends. Clothes,
smartphones, tech gadgets, parties, vacations, massages, and other luxuries are
all enticing, but if you have to put a phone or vacation on your credit card,
you probably can’t afford it. Avoid the temptation to buy expensive things
you can’t pay for in one shot.
You may not have known what you were getting yourself into, but financial mistakes have to be reconciled at some point. Ignoring a debt in hopes that it will go away is a terrible idea.
Debt collectors can sue you at any point in time
The moment you fail to meet your payment obligations according to your agreement, you can be sued for your debt. If you can’t pay it, the court may order your wages to be garnished.
Before you think you’re safe because you’ve
negotiated a new payment plan, think again. You may be surprised to learn that
your credit card company can sue you even when they’ve agreed to accept an
altered payment arrangement from you. Only honoring your original agreement
will protect you from being sued.
For example, if your original agreement is
to pay a minimum of $300 per month, but you negotiate that down to $250 per
month, you’re riding on the good graces of your credit card company. You might
pay $250 per month for an entire year, never miss a payment, and make extra
payments on the side, and they can still legally sue you for the remainder of
Just because you haven’t heard from a
collector, doesn’t mean they aren’t getting ready to file suit against you.
It’s risky to be on an altered payment plan, but it’s even riskier to ignore a
Debt collectors can be easy to work with
Despite what you may read on the internet,
debt collectors can be easy to work with. Many people successfully negotiate
their own debt just by having a casual, polite conversation with the agent on
the other end.
Being polite is a breath of fresh air to a debt collector. “Being a bill collector is stressful,” Michelle Dunn says. “Some people will scream and yell at you, call you names, hang up on you, and cry.” The job of a bill collector is emotionally damaging, and it’s essentially a job where you subject yourself to abuse all day long.
When you’re polite and reasonable, a debt
collector will be more likely to help you out and give you the best deal
possible. Just like car insurance claims adjusters, collection agents are given
the ability to negotiate your debt within certain parameters. If you owe $700
and want to settle your debt immediately over the phone for $500, there’s a
good chance they’ll take it.
Interest is a beast
Ignoring debt makes your interest pile up
with incredible speed. When you ignore a debt long enough, you might end up
owing more interest than the original debt.
If you’ve got a debt with a snowballing
balance due to interest, cut it off at the pass as fast as possible. If you
can’t pay the total amount, or even make reasonable payments, consider debt
consolidation services. A debt consolidation service will negotiate a
settlement amount with each of your creditors, and then bill you monthly until
you’ve covered the settlement amount plus their fees.
4. Choose your debt remedy services wisely
Do your research before consolidating your
debt. Some consolidation services charge a flat percentage of the total debt
you owe after negotiations. Other services are actually a loan that comes with
an interest rate that accumulates each month based on how much debt remains.
Avoid a consolidation service that acts as a loan if possible. Don’t put
yourself in a position where you have to go into more debt to get out of your