Many people feel that they have saddled themselves with numerous loans including mortgages, credit card dues and other feasible loans. In fact, the number of people who undergo financial difficulties is increasing day on day. This results in rapid increase in the number of insolvencies and bankruptcies and IVAs.
You should consult financial experts and learn how to manage your debts
Banks and lending institutions are making good money but they know they can’t recoup many of the loans extended to the consumers. On the other side, many people are opting for secured loans for the sake of debt consolidation so that their monthly repayments don’t create a cumbersome burden at the end of each month. But, the repayment period of these consolidated loans may spread over many years. If you are also facing financial difficulties and are not able to match your income and expenses, you should immediately seek advice from a financial expert. You have many companies that may give you advice as to how your debts can be managed. You may refer to the Citizens Advice Bureau so that you may end up with sound advice which is not altered for any one’s personal benefits.
Keep the communication channels open
When you fail to make the monthly repayments or in case of a payment default, lenders may certainly wish to discuss your financial situation with you. Therefore, you should always keep them informed of your current financial situations. They may understand your pecuniary circumstances and give you some tailor made, options. But, instead of contacting them, if you avoid them, you may be committing a grave mistake. You are neither repaying the loans nor are you contacting the lenders. This may worsen the situation. When the arrears start mounting, it may even lead to bankruptcy.
Debt Collection Agencies
If you and the lenders are not able to come to an amicable settlement or agreement regarding repayment of your debts, the lenders may decide to pass the debts to an agency that does the task of debt collection. After this, your debt will not find a place in the lenders’ records of accounts receivables any more. If this happens, this transaction will find a place on your credit records with a “default” remark. There are certain companies that purchase debts and they may buy your debts from your original lenders.
Default remark and future credits
Lending companies also know that they can’t collect all the loans they extend. They make an allowance or provision for bad debts. These bad debts will be reduced from the accounts receivables. Certain companies turn such accounts receivables to third parties who are collection agencies. These agencies will in turn try to recover the debts by adopting various strategies like negotiating payment plans, offering settlement plans or resorting to legal action. If you have a “default” remark on your credit report or file, you may find it difficult to obtain future credits. If there are multiple defaults, you can’t even dream of applying for credits. These default accounts will show on your credit report files for 6 years unless you clear the entire dues within one month.
So, if you are having financial difficulties, you should seek the advice of financial experts. You should not allow the situation to worsen by being indifferent or taking this problem lightly.
This guest post is authored by Adam Anderson. He is a well-known financial advisor and helps provide useful tips for the same through his articles.
