The Finance Blogger

Collection of debt is something that most people really do not ever want to have to deal with. Debt collectors specialize in collecting debt from people who have been unable to repay their debts. Or perhaps have decided that they have other priorities. Once a loan has gone for several months without the monthly payment being received it can be quickly turned over for debt collection. As a result next thing you know you are getting these obnoxious phone calls asking for money. These people are really not nice. They will give you a difficult time until you pay up. They will harass you until you at least make a plan to repay the debt. The debt collectors only make money when they collect.

Debt Collectors – Collection of Debt

Debt collectors can also come after people who have a payment that they should have paid and for whatever reason have missed the due date. For example, failure to pay your hospital bills, x-ray charges, etc. These can also trigger these kinds of calls and nasty letters in the mail.

Depending on the size of the debt, whether it is secured or unsecured, debt collection will take various forms. They may be quite troubling to many people. For example, let’s assume you purchased a car and took out a loan when you bought the car. The loan would have been secured by the car that was purchased.

Deciding to Miss Payments

If you decide to miss payments on the car loan, debt collection may start with phone calls. However, they then gradually proceed to more drastic action. At the worst point after all negotiations have finished, if in fact there are negotiations, the debt collection process will move to a point where they move to repossession of the car.

Basically, this is the last resort. The lender needs to repossess the car in order to sell it. They use the proceeds to recover the loan and all fees associated with the cost of the loan and repossession.  Don’t ever allow your debt situation get to this point. Take action and pay your monthly payments. Also, talk to the lender to negotiate or renegotiate the loan.

Missing Payments on Your Mortgage

Car loans are bad enough and no one certainly wants to lose their car and have it picked up in the middle of the night by a tow truck because they have not met their monthly payments. But what about your home? Many people over the last four years have been dealt a blow from the economy, losing their jobs and barely finding enough money to put food on the table, let alone pay the mortgage every month.

Housing Market Impact

When you are not working and unemployment runs out and your savings run out, most people will try to sell their homes to get out of under this crushing debt. They will move into apartments or back with their parents. Unfortunately, the housing market also fell and it fell big time. Homes were worth half of what they used to be and the mortgages on these homes were higher than what the home was worth. Even if the home was sold, there was still a mortgage that had to be paid.

The collection of debt became really complex. How do you collect from someone who has lost their job and has no assets? The banks were in trouble now and this is where the government stepped in and bailed them out, but they did not bail out the little guy. Consumers all over the US still owed a debt and they had no way to repay it, so they declared bankruptcy and walked away from everything.  We have seen homes that still had all of the furniture in them, clothes in the closet, and even food in the fridge. One home had a wine rack still full of wine bottles, none of which were very expensive. These people have no assets left and collection of debt is impossible with these consumers as well.

How Long Will It Take to Recover My Credit Rating

It can take several years for the shadow of bankruptcy to be lifted and depending on the circumstances you may still owe money as well. It is a decision not to be taken lightly and should be discussed with a bankruptcy lawyer. Your credit rating will be nonexistent and you will not be able to obtain a loan for any personal loans or mortgages. You may not even be able to obtain a credit card for some time. These are difficult times and everyone wants to avoid debt collection and bankruptcy at all costs.

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