Who’s quick to borrow is slow to pay

It isn’t a secret that when you have some savings and when you are successful in businesses, you feel secured and confident in tomorrow. It happens because money gives us feeling of immunity and even omnipotence. But on the other hand what happens if we lose all our savings and money we earn? It is crash and terror! And now you have to incur a debt, limit yourself in everything… and what will happen in future?

How often do you use your credit card? Or should I ask how often do you use cash? Because using credit card became habitual part of our lives. We use it when buying something in the store or if we need to pay for medical or other services. Also we make purchases online. There are no doubts that using card is very convenient method of payment. Problems appear when borrower loses control of expenditure and can’t close credit “hole”. There are many reasons according to which you can’t pay your bills any more. It can be loss of job or your family income can decrease and you make minimum payments and spend money from credit card for living. And at this moment you can get to bad circle when you borrow money in one place to cover minimum payments in an other. Situation is terrible and it is very important to know what fallows next.  Let’s investigate, what happens to those who stop paying by credit card.

What happens to those who stop paying by credit card.

Credit Card debt is a consumer debt that arises when customer stops paying his bills. If you buy items using your credit card and don’t pay off this sum to credit card company in time, you get a debt that will increase with every following purchase and with interest and penalties that you have to pay. As a result you will have to pay additional charges for late payment and credit card company can report to a credit rating agency, that will influence on your bad credit rating in future.

So, when you have credit card debt following things will happen:

1. Collection Calls
2. Credit Card Cancellation
3. Collection Agents on your Door
4. Increased Interest Rates
5. Bad Credit Score
6. Legal Action
7. Bankruptcy

Snow ball

Most credit cards have preferential repayment period, during this period minimal extra percentage is charged for using of money owed. After its termination you will have to pay usual credit rate (it depends on the bank or credit card company you deal with).

Every bank has its own rules how to offset your debt by credit card. Some ask you to pay off whole sum that you withdrew during the month. Others ask you to pay 5-10% form basic sum of debt and monthly payments. The rest of the sum you can clear off at the end of term. It is important to show your bank that you remember about your credit.

If it is time to pay off money, but you don’t have them, you will get punitive measures. As a rule it is a raise of landing rate and penalty. Of course measures may wary  from company to company.

Next Step

The next bank’s reaction is to block your access to credit card. How soon it will happen depends on bank’s policy. Some financial institutions block your card in the day of default. Others give you some time – from several days to month.

In this period customer is “attacked” by phone calls and letters. It is like notice. Executives will explain you situation and punitive measures. Also they will ask you to promise that you will pay back your debt. If you didn’t manage to do this, you will be offered different ways of clearing off and refinancing.

If these means didn’t help collection agencies start working with you.

Collection agency and legal actions

Collector agency can work on behalf of credit card company, bank or other lender or it can “buy” your debt and you will have to pay off money to the agency. They use different methods to get money back soft, hard and legal. The first one means phone calls and advices. The second one – personal contact (they can visit you at your house, at work or to invite you to their office). And the last one is low suite. If the creditor wins a judgment they will be able to garnish your salary (up to 50% every month); seize personal property such as cars, boats or jewelry; or they can place a lien on your bank account. In some states collection agencies may even seize your home. Also you can be forced to leave your home and it will be sold to cover your debt.

Of course you can hide from collectors and hope that in a couple years bank will mark your debt as bad dept. but you should understand that card holder gets to “black list” of unreliable borrowers forever. It means you will have very bad credit score and credit history that minimize your chances to get another loan in future.

Who can help

Having debts is terrible situation, but if you got in it, you shouldn’t become disheartened. There are companies that can consult you on debt questions. It is always useful to deal with person who understands what is happening and want results of your actions can be. You need professional to realize all problems and find way out. The choice of companies that offer such services is wide. As an example I can name CreditCardDebtNegotiations. They will offer you free consultation and free help. They will provide you with right strategy how to reduce your credit debt.

Some credit card debt statistics

·        Average credit card debt of the family is about $15,700. And every card holder has average debt of $5,100

·        According to US census bureau in 2010 credit card debt of U.S. citizens is over $886 billion

·        According to Consumer Reports survey:

 “ - 54% of Americans pay their balance in full each month

-  33% carry balances up to $10,000 (median balance: $2,254)

-  13% carry balances over $10,000 (median balance: $17,366)

-  21% of consumers said they were treated unfairly by card companies

- 45% of survey respondents say they are charging less

- 11% are charging more than they did a year ago”

Result

Practice shows that it is possible do not pay small credit card debt. And bankers rarely bring an action in such cases. But this debt will spoil your credit history forever.

What to do if you cannot pay your bills?

Nowadays due to complicated economic circumstances many people find themselves in a situation when they cannot pay their bills. A lot of people face financial problems some day in their lives. These financial problems can be caused by the loss of a job, long illness or overspending. Your financial situation can be and must be improved and there are some strategies you can follow that might help you to solve your problems.

So what to do if you do not have enough money to pay all your bills? The first thing you must do is to decide what bills you should pay first and deal with you debts.

Track your budget. You should put in order you finances and develop your budget. It is very important to take control over your expenses and understand how much money you get and how much you spend: list all your income and all your expenses. It is important to write down not only your fixed expenses (mortgage, rent payments, car loans, electric, water, heat bills, insurance bills, court ordered payments and of course food), but also expenses that can vary (closing, entertainment, recreation, cable television). By tracking all your expenses you will understand what expenses are unnecessary and create a plan to save your money and after all pay down all your debts.

The order of paying bills. Now it is important to start paying your bills. But what order you have to choose in order to pay them? The fixed expenses must be paid first. First of all you should think and understand what is important right now for your living. Housing expenses come first as every person needs a place to live in. You also need some food to eat. Credit card payments and other insignificant bills should be at the bottom of your debt list. It is better to pay some amounts towards all your bills, of course if you have money. You can also develop a special strategy for debt repayment. Think about how to pay each bill: maybe paying smaller amounts over a long time period will help you to maintain your financial situation until your financial matters change.

Contact your creditors. You should immediately contact your creditors if you have troubles paying the bills as far as lack of knowledge can lead you to a court. You must be honest with them and try to explain the occurred situation. It is better to let them know beforehand about the problems you have and get some help than to avoid your creditors and sooner or later your bills will be sent to collections and you will definitely not get any help. Some creditors can compromise and develop a repayment scheme that can satisfy both sides. You can even offer your creditors your own scheme of repayments, the one you can afford. If they do not want to accept it and will take you to court, it will set the repayments that you will be able to afford.

Increase your income. Try to find any ways of increasing your income. You can find a part-time job or refuse something that you do not obligatory need: second car, landline or cell phone, cable television, etc. You can sell something that you do not need and return something you haven’t been used. Try to get any extra income you can in order to improve your financial situation.

Debt collections. Remember that you have certain rights, if your bills have gone to the collections. Debt collectors can contact you only from 8 a.m. to 9 p.m. They cannot contact you at inappropriate times or places or call you at work unless you agree with it. It is forbidden to threat or to use indecent language. They are obliged to send a validation notice and explain how much money you owe and to whom.

Begin paying your credit cards. Once you have paid all your main payments such as housing, transportation, taxes, you can start paying your credit cards bills. It is very important to maintain your credit history clean and avoid high fees. If you have several credit cards bills and you cannot pay them all at once, try to pay at least the minimum payments just to keep the account current. If you do not have the enough sum of money to realize even the minimum payments on all of your credit cards, you have to choose and assign priorities. You can make some steps towards limiting the negative impact. Check all your cards in order to find if there are any grace periods. If there is a grace period, you have several extra days until the last payday that will help you to avoid a late payment. But remember that the main consequence of being late with the payment is that the credit card company can increase your interest rate.

If you do all the mentioned above, you have a lot of chances to get back on your feet and improve your finances very quickly. Once you are back again, take some reasonable steps in order to pay everything back as quickly as possible.

Eventually, in future you should try to make all the payments and settle all your bills in full and on time. Making late payments should not become a habit for you as it can cause only big troubles for you and your family. Unfortunately, financial problems can occur to everyone and it is not always possible to pay all your bills dead on time, but you should do your best. If you are unable to pay your bills too often, it is time to calm down and think about your financial situation in order to make some proper changes to you personal financial management. Take a closer look at your expenses in order to get out of this rut. Stay calm and do not panic, try to do all your best in order to work out an effective plan of action.

Does someone owe you a specific sum of money? How can you get it back?

It is well known that business is a risky sphere. Every manager wants to know in advance which problems and risks his company will be faced with. One of the main tasks of any company and of the management in general is to reduce risks to a minimum by means of securing effective functioning of production, market research and legal ways of carrying on the business.

Does a person or a company owe you a specific sum of money? Have you been waiting for this sum of money in vain to be paid back? Unfortunately, this kind of situation occurs very often and it is a big problem for a businessman when he faces the failure to pay.

So what are the legal ways of getting back the money that you are owed? What steps should you take in order to stay legal and without getting into a conflict? This article deals with the debt collection strategies and the certain pieces of advice about forcing customers to pay for delivered goods and services.

Usually the process of collecting debts owed to you is not a pleasant one both for you and for your debtor. There is a sharp edge of being rude or being soft. If you are too soft, there is a chance to delay the process of paying back. If you are too insistent or even rude, your debtor can find lots of pretexts for avoiding you and as result the process of paying back can also be delayed. All in all you have to be flexible, firm, pushing and quite insistent in order to have no trouble in getting what you are owed.

Evaluate the situation. First of all, before going further and take some steps, you should evaluate and examine the occurred situation carefully, as it is really easy to ruin a business relationship due to being too unreasonable with collecting outstanding accounts.

Contact your debtor. Business is a risky affair, so there could be a lot of excusatory reasons for why you have not been paid back the money you owed. So before taking any legal actions, you should contact your debtor and discuss directly the occurred situation: reasons for non-payment, debt payment terms, undertaking of obligation, etc. Your first contact is like a reminder for the debtor that the bills have not been paid yet and you are still waiting for an amicable settlement of this situation. The most effective way is to meet your debtor in person. You can also make a phone call or write a letter, but remember that a face-to-face contact gives you lots of advantages and chance to get your money as soon as possible. At this stage you have to remind the debtor how much he owes you, the date you loaned this sum and when you expect it to be paid back. You can also take a witness with you if there is such a possibility. At this point a certain percents of debtors try to repay the owned sum of money at once in order to save face and preserve reputation of a good partner.

Contact influential people. If nothing of the above mentioned works, you should definitely contact someone who has an influence upon the debtor. In this instance you should let your debtor know that you need the bills be paid and till now you are not going to bring legal actions against this subject.

Still no success? Are you still unable to collect the debts even after various requests and reminders? Now it is time to send a formal letter via registered mail that includes names and addresses of the debtor, all the documents related with the debt, the final date when the payment can be made and a notice that in case of not receiving the payment back, you will take this matter further by bringing legal actions or contacting a collection agency. You can also contact you debtor through your lawyer and, as a rule, this kind of action is considered to be effective so far as nobody wants to deal with courts.

Refer to the contracts and obligations. If you do not want to have any financial problems with your partners, you should make a contract with them stipulating terms and payment amount in advance. It is very important to have as much evidence to show that you are owed the money as you can. Make it a rule to keep copies of letters, emails and other documents concerning business matters. The more evidence you possess the more chances you have to get your money back.

Taking the matter to small claims court. If you have done everything mentioned above but there are still no results, it is time to take this matter to a small claims court but only if there are quite enough necessary proofs. It is a simple procedure and you do not need an attorney for this kind of affair.

Mediators and collection agencies. Instead of going to court you can resort to the help of other debt collection strategies such as mediators or debt collection agencies. Mediators are engaged in order to resolve disputes outside the court. Debt collection agencies are hired in order to pursue the money that you are owed.

It is very important to stay calm and not to make any threats as your business should be within the law. You should not resort to the help of non-traditional business methods because afterwards you can be accused of extortion.

If your debtor offers you a partial payment, it is better to accept it in any case. Always demand the whole amount, but be ready to accept any offer from other side and maybe to divide payments into some equal parts for debtor’s convenience and your calmness.

Remember that nothing is impossible and even incorrigible defaulters can be collected but you should follow certain debt collection strategies that will definitely help you in getting back your money.