Do your expenses exceed your income? Are you now not only in debt, but have debt that is past due? The theme of this paper is ‘where to go from here’.
As is the case with managing active household debt, which was discussed in my previous paper, to pay-off delinquent debt of any type requires a thoughtful process.
First and foremost, when you have limited funds to repay delinquent debt, focus on keeping your other active accounts in good standing. Do not sacrifice your current accounts/tradelines for those that have already affected your credit. Instead, pay those past due accounts as your budget allows.
This does not imply that you should ignore delinquent accounts, but that you re-balance your expenses to allow for thoughtful repayment of your delinquent/past-due debt(s).Should you ignore your past due accounts, be assured that your creditors will continue collection efforts on your account(s) until you bring the delinquent account current again.
It is imperative that the consumer understands debt collection agencies are federally regulated with stringent oversight. Long gone are the days of delinquent borrowers being potentially threatened or harassed by bill collectors. The most common mistake that the delinquent borrower can make is to ignore collection calls or letters.
The need to employ a debt relief company, like a credit counseling agency is at your discretion. Other options such as debt consolidation, debt settlement, and bankruptcy are also available. However, most issues with past due accounts can be resolved by simply communicating directly with the collection representative to who your delinquent account has been assigned.
Be aware that although it is probable that your delinquent debt is being reported to the credit reporting agencies, successful resolution of your debts will result in an update of those same tradelines by either the collection agency or their client – typically the originator or the current debt owner. It is a common misnomer that a negative tradeline can simply be removed. This is untrue except in certain isolated circumstances. As a rule, neither creditors nor the collection agencies they employ will remove a negative tradeline. However, dependent on the State in which you live, there are laws which govern how long a tradeline may remain on your credit bureau.
Upon contacting the collection agency that is servicing your delinquent account, you will learn that through thoughtful and transparent communication regarding your financial circumstances, you will arrive at a variety of repayment options which may include settlement in one or multiple parts or a repayment plan over time.
A settlement payment is an amount that’s some percentage less than the total amount due. The more you’re willing to pay, the more likely it is that the debt collector will be authorized to work with you.
How to Effectively Manage PAST-DUE Household Debt A re-payment plan is typically provided to those without savings our financial resources other than regular income from sources such as a place of employment. You are your own best advocate, follow these simple steps, be informed and you will no doubt find a path to your financial well-being.