Unsecured Debt Collection
Dealing with unsecured debt collection can be difficult and complicated for both the debtor and the creditor. There are a wide variety of liabilities that would come under the umbrella of unsecured debts. For a debt to be considered secured, there must be some type of asset that is attached to the loan. In the event of a loan default, the asset that is connected to the loan can be repossessed and sold in order to recover at least part of the indebtedness. Automobile loans and home mortgages are two examples of secured debts. When dealing with debts that are not secured, there is no possibility of repossessed assets offsetting the remaining liability. Credit card payments, student loans, even utility bills are considered unsecured liabilities. When a debtor defaults on these debts, a collection agency is usually brought in. Collections agencies might deal in a variety of debts, or they might zero in on only one type of liability. Some agencies specialize in collecting financial debts. In this category are car loans, credit cards, lines of credit or other indebtedness that involve banks and financial institutions. Indebtedness that was caused by health care related expenses can often be collected by specialized agencies. These liabilities can include doctor bills, payments to dentists, or other medical expenses. Overdue payments on retail charge accounts for department stores and other businesses will frequently be pursued by specialized unsecured debt collection agencies. There are also organizations that recover funds related to bad checks.
In unsecured debt collection, creditors will have certain legal rights. While there may be sympathy for individuals who are unable to meet their monthly obligations, creditors are often honest businesses that can't afford to take a loss on unpaid debts on the part of delinquent clients, patients, or customers. When debts are secured by assets, the creditor has a realistic option to gain repayment. But when debts are not secured by any assets, the creditors can find themselves in a bad situation. That is why unsecured loans are considered greater risks than secured loans. A creditor will usually begin by sending notification of the expected payment to the defaulting debtor. This step can sometimes help to initiate an agreement that gives the debtor reasonable options for repayment. If this does not work, the services of a collections agency will often be called upon. There are specific laws against harassment during attempts to collect delinquent payments. Failure to obey these laws can result in an award of damages to the debtor. Most providers of unsecured debt collection will require payment for funds recovered. This payment could be as high as fifty percent of the amount collected. To avoid additional court costs, efforts to settle the situation out of court should be pursued before bringing suit.
While the creditor has certain rights when pursuing unsecured debt collection, debtors have rights as well. Fair practices when collecting on delinquent payments are not only a matter of courtesy, but a matter of legality as well. The Fair Debt Collection Practices Act outlines the methods that collections agencies can utilize. Fair treatment and non harassing methods are required in any collections activity. Collectors may only contact a debtor between the hours of 8 a.m. and 9 p.m. If an employer will not allow agencies to contact individuals at work, the collector must respect that preference. If a debtor writes a letter to the collector requesting that the contacts cease, the collector must stop calling. Contact can only be made if there is some action that will be taken that a debtor needs to know about, or if the collector wants to inform the debtor that contact has been halted. Harassment of any kind on the part of unsecured debt collection agencies is absolutely not permitted. Examples of harassment could include verbal abuse, any kind of threat of violence or bodily harm or harm to property, obscene language or profanities, lies and misrepresentations, as well as threats of legal action when legal action is not applicable to a debtor's situation.
Creditors do have the option of claiming delinquent payments as losses. Many creditors will do just that, turning over delinquent accounts to unsecured debt collection agencies. At this point, the debtor will have to face the practices of professional agencies rather than the original creditor. This can mean a stickier situation for the debtor. Coming to some kind of settlement may be more difficult in these cases. Generally, it is much better to try to come up with a solution to unpaid debts quickly with the original creditor rather than waiting until the situation spins out of control. Dealing with collection agencies and unpaid bills can be stressful to the point or robbing the debtor of a good night's sleep. The Bible talks about the comfort that is available to believers. "I will both lay me down in peace, and sleep: for thou, Lord, only makest me dwell in safety." (Psalm 4:8)
For some debtors, looking into credit counseling can be a good idea. This approach can eliminate the need to deal with unsecured debt collection agencies. There are a wide variety of credit counseling agencies and not all are reputable. Agencies that charge high fees at the point of sign up or continue to collect such fees on a monthly basis may not have the client's best interests at heart. Any organization that pushes a potential client to sign up for a program without carefully looking at that client's individual financial information should be avoided.
Unsecured Debt SettlementsUnsecured debt settlement is an important opportunity for those who own credit cards, use them frequently, and intend on paying off the balances. One of the main reasons to use this type of loan is to avoid bankruptcy. There are two main categories for small loans: unsecured and secured debts. Secured debts have collateral to back them up. For example, a home mortgage is secured by the home or property, which can be seized by the lender if the debtor fails to pay. Unsecured debt is a loan that has no collateral, but uses personal financial information to secure the money, such as pay stubs, credit history, or other financial information. These are the debts that have zero assets to back up the loan. Many people use unsecured debt settlements to help them manage their credit load.
When a person finds himself behind in payments because of some crisis in his life or because of mismanagement, he can apply for unsecured debt settlements to help ease the current financial difficulties. Some creditors arrange a short payment plan with a lower interest rate than on the credit card balances. This short-term approach is a more common solution for those with a large amount of credit card debt. Other forms of unsecured debt settlement stretch to from one to four years to enable the borrower to pay over a longer period of time.
Applying for unsecured debt settlements does not mean that a borrower will automatically receive any relief. Creditors use a set of standards within their operating procedures, paper work, and acceptance offers. Acceptance offers include the monetary amount and time frame for the loan. The borrower must carefully scrutinize several unsecured debt settlement offers to find the best package possible. Proverbs 3:7 says, "Be not wise in thine own eyes." A personalized assistant trained in dealing with creditors knows what and how to ask for the appropriate rates. He can help the borrower burrow his way through the legalese and difficult language in this arena of finances. In fact, if creditors perceive a person's lack of knowledge, they may take advantage by securing loan repayments that are actually higher than the amount due at the beginning. Unfortunately, some creditors may coax the unsuspecting applicant into revealing financial information that he doesn't need. Another concern for the inexperienced debtor is that he doesn't know how to negotiate with creditors. Even with the most honest creditors, negotiation is a must to get the best deal possible.
Guaranteed debt settlement are out there and offered by various companies. However, debtors must have realistic expectations and understand how much it will cost. A wise consumer shouldn't just take a company's word for it, but should get it in writing before handing over any hard earned cash. The company the debtor chooses should also be highly recommended and reputable. They should have a clean record with the Better Business Bureau as well. With a good company's help and God's strength, the debtor can arrive at a solid payment plan and be on the way to full financial relief. "God standeth in the congregation of the mighty; he judgeth among the gods" (Psalm 82:1).
Attorneys and specialists in debt management negotiate guaranteed debt settlements. There are a lot of credit card companies and creditors who will settle for pennies on the dollar if payment is made immediately. Some will bargain for not only a lower amount but a planned repayment period as well. Because companies that offer guaranteed debt settlements work with these people everyday, they are aware of common business practices and negotiation tactics. These professionals are skilled negotiators who know the ropes so they can promise a payment plan that works for their clients.
Guaranteed debt settlements can be negotiated with just about any company, including the IRS. Most people are not aware the IRS will settle debts. These planned negotiations work with most any sort of debt, though. The service will examine the debtor's accounts to verify that assistance can be provided. This service is often offered at no cost to the client. No company wants to promise a guaranteed debt settlement without being aware of the balances owed. The company should provide costs and guarantee information up front before a debtor agrees to their services.
Most Americans find at some point in their life they need help with finances. If a hardship is encountered through medical emergencies, a death that results in financial disaster, unemployment, or just over use of credit cards, a guaranteed debt settlement might be exactly what is needed to regain economic stability. Payment negotiations can help bring the financial peace of mind needed to recover from adversity and put the client back on track with spending. There is no shame in seeking a negotiations if they will lend a hand in pulling the consumer out of the monetary quicksand that threatens to envelope their life. Research guaranteed debt settlements to make positive steps to get out of debt.