Best Way To Handle Debt Collectors If You Can’t Repay Your Debt
When your financial affairs went down for any reason and you can no longer repay your loans or other debts, then you should find out what is the best way to handle debt collectors. Perhaps your business began to experience difficulties or you could lose your job, but you still need to pay for housing, refuel your car and eat something.
No matter what your problems are, lenders will want to get their money back and therefore debt collectors come into play here. Often this is due to the most unpleasant moments in your life when you and your family members receive letters and phone calls with threatening requirements, but in spite of everything you can mitigate these troubles for you and make interaction with debt collectors less painful and unpleasant.
Find out as much as possible about what is the best way to handle debt collectors to remove this hell from your life. If it seems to you that this is impossible or will require some extra effort from you, then in fact, not everything is so bad and you can do it by following some simple rules.
Try to negotiate
In the event that you are not able to respond for your obligations, this is usually associated with the most unpleasant feelings and emotions. Besides the fact that you are under pressure from those to whom you have unliquidated obligations, you most likely feel uncomfortable and insecure yourself, since your reputation suffers.
As a result, you get not only the lack of the ability to receive financial support in the near future, but you also gradually develop depression, because you are constantly in a state of stress that does not leave you for even a minute. It is unlikely that in this state you have a great desire to communicate and get to know people, and every unknown phone call makes you tremble, since it most likely involves the most unpleasant communication with debt collectors.
But you should also understand that hiding from the world and people you will not solve your problem. This forces you to look for the best way to handle debt collectors to get rid of this problem. Only after talking with representatives of the lender or collection agency will you be able to resolve this issue.
Start talking with debt collectors, pick up the phone. Do not make your situation worse by simply ignoring them completely. With calm, adequate communication, you will have the opportunity to inform them of your situation. Try to explain your circumstances, how you ended up in them and what capabilities you now have to get out of them.
Even if you still have no idea how you will get out of the difficult situation with your finances, you will probably be able to work out a repayment plan together with a debt collector, agree on a temporary reduction in the monthly payment, suspension of the payment of debt or the recovery process for several weeks or even months. During this time, you can improve your affairs, which is easier to do without depression and constant stress.
- Very often, debt collectors are ready to delve into your problem and compromise, while ceasing to put undue pressure on you. With this approach, you will most likely receive a different attitude from the lender or the debt collector, less pressure and more correct treatment.
It is worthwhile to soberly assess your capabilities that you have in the circumstances, to estimate from what you can refuse now and carefully calculate how much you could repay on your debt. The best way to handle debt collectors is to draw up a preliminary debt repayment plan and then arrange this with your creditor.
Debt restructuring
When you stop avoiding talking with the creditor, you can find out that one of the best way to handle debt collectors, in addition to paying off the debt itself, is debt restructuring. This method can help you pay in the end, sometimes several times less money than you should have at the very beginning.
This is possible due to the fact that the lender or collector can write off part of your debt if you offer him to pay a significant part of the debt immediately. Many will prefer to get less, but now guaranteed, than an unknown result sometime later, because for various reasons they may eventually not recover most of the debt from you, and the costs can be quite large.
At the same time, when making such a deal, you should be very careful that the rest of your debt is not reported to the IRS as your income, from which you will then have to pay taxes. For example, you had a debt of $ 10,000, you were unable to pay it, and it was transferred to a debt collection agency. Then you agreed with the debt collector that you would pay $ 5,000 and so completely close the debt. You will receive a notification that you have closed a debt for a smaller amount, but it is considered to be fully repaid, but in the tax service this can be regarded as the fact that the remaining money of $ 5,000 is left with you and that this is your profit.
Not only will you have to pay income tax on this amount, but also your credit rating may suffer additionally. It is worth weighing everything carefully beforehand. This does not happen in all cases, but if you yourself are not an accountant, then before agreeing to such conditions with a debt collector, it is better to discuss this with a professional in order to exclude such a possibility.
Find an opportunity to pay the debt in full
This, of course, may sound strange, especially considering that you were no longer able to pay your debt obligations even in installments, but in fact you can almost always find a way out of almost any situation. Sometimes it’s enough to get off the beaten track, which, by the way, has led you to this dead end and just look around for opportunities.
- Family members and friends. Although in a situation where you are not able to meet your financial obligations, you don’t really want to communicate with other people, even with relatives, and even more so to talk about the difficulties you are in, it can be the most effective and cheapest for you the best way to handle debt collectors and get rid of psychological pressure and unpleasant communication with them, sorting out debts in this way. Just overcome this threshold by admitting that you are in a difficult situation.
- The next effective way to quickly get rid of the pressure of collectors, even if you do not have anyone who could help you, is to use the services offered by many online lenders working with borrowers with poor credit status. Even when you have a very sad situation with a credit score, such lenders in most cases will be ready to offer you options that will help to get out of a financial tailspin. You are very likely to be able to get a personal loan to pay off debt or to consolidate all your debts. So you will end up with one general loan, which will be easier for you to repay than several different ones, and besides, there will be no more phone calls with threats, letters and other elements of psychological pressure on you from debt collectors.
Remember that you have rights
Often, communication with debt collectors turns into a thriller for debtors, especially when the latter tries to hide and by all means avoid communication with a collection agency. Collectors organize a “hell of a life” for the borrower who cannot pay the debt and because of constant psychological pressure the debtor may become depressed, which does not contribute to a quicker solution to the problem.
- Some collectors can make late calls, threaten, harass, intimidate and in other ways make life terrible, but the debtor himself must remember that despite the unpaid debt he has all civil rights.
This means that if the collector allows himself to intimidate you, threaten, swear, prosecute and other actions that violate your rights, then you can sue him. In addition, some collectors, so that threats have a greater effect on the debtor, may resort to significant exaggeration of the debt or the use of outdated information about the debt, which is also a violation of the law.
Remember that if you cannot pay the debt, then this does not automatically make you a criminal, and even more so the collector is not entitled to determine the degree of your guilt, but only the court. Therefore, do not allow such treatment of you. Try from the very beginning to communicate with the debt collector and set a calm tone as a person who knows his rights, this most often sets up for a constructive dialogue.
You should also be aware that you cannot endlessly be required to pay old debt, since debts also have a statute of limitations and after a certain period the court will not consider the claims of the creditor or collector, while the last one may try to continue to knock the debt out of you whereas he has no a legal right to do so.
Seize opportunities
Nobody wants to experience unpleasant communication with debt collectors as a debtor, so the best way to handle debt collectors is not to bring your debts to the collection.
If this happens, then use one of the options that we described above to mitigate this trouble and overcome it as quickly as possible. When you do not know how to solve the problem, contact online creditors working with bad credit.
To choose the best option among the offers of such creditors, fill out an application on our website, then get a fast response from many lenders and compare them. It is better to take a personal loan to consolidate your debts than to allow the sending of your debts to debt collectors and be pressured by them.
Learn more from our blog about personal finance, loans and credit cards, and how you can quickly improve your credit status or build it from scratch. Use the search to find answers to your questions.
