There is always a fear of the unknown. Remove this fear by the light of knowledge and you can see things in a better way and the world will always look to be a positive place for you.
Today, the economic conditions are such that if you fail to give attention to your debt and its repayment you are very likely to face a situation where the delays can give way to defaults resulting in your account being handed over to the collectors for recovery. Collectors get their fees on the amount they collect and hence they leave no stone unturned to find you get the money back from you. While there is no fixed way or pattern that the collectors follow for collecting the debts they are generally found to be on the phone at home or at your office where the debt collector would force you to clear your debt. They have an authority to force you to pay off your debt as soon as possible and you can’t ignore them until they trouble you so much which they are not allowed.
There have been a lot of cases in the recent past where the debtors have been forced into a situation where they have committed suicide for no reason but the incessant follow up by the collectors for their debt. Had they possessed enough money they would have straight away handed over the creditors but knowing that they are not in a position to make the payments the collectors try all means which includes disrespecting the debtors and threatening them for their life. Things are really bad when looked at from the point of view of the debtors and there is little that they can do.
The government has definitely come up with laws which offer some bit of cushioning to the debtors but whether it is able to safeguard them completely still remains to be answered. Also, there are a lot of debtors who know little about the existence of these laws and hence there has to be widespread awareness programs which can help more and more debtors know about the existence and the real benefits of the laws for them.
Debt collectors are the agency who is skilled in collecting money from borrowers if they are not clearing their dues on time. These are the people appointed by our creditor who failed to collect money from you. They work as an agent of creditor and charge a nominal fee or some percentage of the amount they recovered as a debt. These debt collectors also help debtors by analyzing their finances and giving them ideas to pay for their debt. They give a certain idea to debtors who help them to clear their dues and creditor is also satisfied by the modification in payment.
There are situations when debtor faces financial crisis because of which one is not able to pay toward his loan amount and wants creditor for some discounts. So to deal with it a creditor has to give him a discount and debtors have to pay toward his loan amount in one fixed full settlement, and if the creditor accepts that money than the rest amount will be forgiven. But it is necessary for a creditor to agree with them amount offered by debtors. He may ask debtors to raise the amount if he is not satisfied with it so it is better to offer good amount so that he accept it rather than change his mind. But this settlement is only acceptable if the consumer is facing genuine financial hardship. But a settlement will only do when the debtor was regular with his past payments and facing problems in paying because of sudden financial crisis.
It is not necessary that you’ll find debt collectors behaving politely to you and requesting you to settle down your debt. They may use abusive languages and pressurize you to pay off your debt. Both federal and state legislative give right to customers to file a case against the debtor who use foul languages and cheap tactics to pressurize you for paying your debt. There are some general rules for debt collectors like they are not allowed to call during working hours, they can call you late night, they are not allowed to go in your office for collection etc.
All customers are protected under Fair Debt Collection Practices Act (FDCPA) by professional debt collectors who use wrong ways and cheap tactics to collect debt for creditors. But this act is not applicable to banks, store and private lenders.
The following are some highlights of the rules:
Sometimes there are situations when debtors can’t pay to creditors at all after the financial crisis. Then they only have one option of bankruptcy under chapter 7 or 13.
According to chapter 7 of bankruptcy, the debtors have to give his assets to clear all dues of creditor along with the charges incurred in bankruptcy. But there are some assets which are out of this act and debtor can save them from creditors like their home in which they are living, retirement accounts, annuities, stock bonus plans.
According to chapter 13 of bankruptcy, the debtor is free from losing his asset. In this court will make a repayment plan for debtor according to the debt amount so that the debtor can pay off easily. They may reduce the interest rate and some debt amount so that the debtor can manage to pay off his dues.
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But both of this bankruptcy spoils your credit score. Chapter 7 will be present in your credit score for 10 years and chapter 13 will be presented with your credit score for 7 years.
Bankruptcy is the last option which is used by debtors to clear off his debt. It is better to avoid bankruptcy and find any alternative to pay off dues because if you file a bankruptcy then your credit score will be spoiled for at least 7 years which is a long time. You can’t rebuild your credit score once you file a bankruptcy. Even if you apply for a new job your employer will also ask that have you filed a bankruptcy or not. Life after bankruptcy is equal to imprisonment. You can’t apply for finance in banks and professional lenders. No one will provide you finance. And those who will finance you will charge very high interest rate like 30% 35% which is unbearable. So avoid bankruptcy at any cost.
Alice has many years of knowledge as a real estate agent. Now she works as a consultant to other real estate professional. If any of our reader’s has any query, suggestion, you can contact through this blog.
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