Christian Debt Collection Services
Creditors often use Christian debt collection services for a twofold purpose. The first purpose is to obtain payment on overdue bills and the second purpose is to move a debt from an organization's accounts receivable database. It is unfortunate that many individuals incur debts that they are unable to pay back. In these situations the creditor is put in the position of taking action to recover the money that is owed to them. Turning to debt collection services is often the only way to gain back at least some of the funds that are owed. When all is said and done, there may be a significant difference between the amount of monies received in the recovery of debts and the actual amount of cash that was originally owed. The difference between these two amounts is typically labeled as a loss and written off by the creditor. Just how much pressure can be applied to individual debtors can vary according to circumstances, but these practices are controlled by law.
The way that debt collection services work is that the service will retrieve payment from debtors and charge a fee for collecting these debts. That way a creditor can turn what can be a sticky situation over to professionals in this field. Hopefully, this will result in a win/win situation for both the service and the creditor. These debt collection services might also function by purchasing a debt outright. Since these debts are being purchased for far less than their face value, the service can pursue the full value of the money owed while the one time creditor can simply write off any losses. A company may have an individual department that handles delinquent accounts. When this is the case, the department that is engaging in efforts to recover a financial obligation is considered a first party agency. The laws that govern how collections take place will vary depending on whether the agency that is trying to collect the money owed is a first or a third party agency. The person who owes the debt is considered the second party in these situations.
Before independent debt collection services are engaged, a first party agency will usually handle collection proceedings. This can generally last for around six months or so. After that, the liability is often handed over to a third party agency and written off by the first party in most cases. These third parties are what is usually referred to when the phrase debt collection services is used. Contingency fees are sometimes associated with the hiring of these agencies. When an agency collects on a balance that is due, a percentage of that balance will go back to the third party agency. Should a first party creditor decide to curtail any further collections on an obligation, that first party creditor will often pay the contingency fee as part of a cancellation agreement. Other agreements could include a no collection-no fee arrangement. This simply means that a third party agency will not be paid if they do not recover any delinquent balances. The Bible talks about the importance of trusting the Lord. "Rest in the LORD, and wait patiently for him: fret not thyself because of him who prospereth in his way, because of the man who bringeth wicked devices to pass." (Psalm 37:7)
A law was passed in 1977 called the Fair Debt Collection Practices Act. This law controls the practices that are associated with debt collection services. One area of activity that is controlled under this law are the hours of the day or night that collections agencies may contact a debtor. Under this law, a third party collections agency can't make any kind of false or misleading statements when attempting to recover financial liabilities. Administered by the Federal Trade Commission, this act also states that an agency can not use unlawful threats to coerce a debtor and also can't suggest possible courses of action that the agency has no intention of following through on. The practice of placing phone calls for the purpose of tracking when an individual is likely to be at home and receiving calls is legal under this legislation. However, third party agencies are not allowed to place calls in a way that will cost the debtor money such as collect or toll calls. The main role of the collections professional is to remind the debtor of the money that is owed and to encourage the debtor to make attempts at repayment.
The reasons that an individual debtor may find themselves dealing with debt collection services can vary. Poor planning, or over estimating how much indebtedness a consumer can handle are common reasons. Job loss, health issues, or loss of a primary breadwinner can also cause an individual to struggle with bill payment. Organizations such as Americans for Fairness in Lending can help consumers who face these dilemmas. These non profit organizations can help debtors understand exactly what legal rights pertain their situation as well as how to best handle any dealings with third party agencies who may be contacting them. Since some collections professionals work on a commission basis, these workers can be extremely persistent in their efforts, and at times even attempting to bend the law, or violate a debtor's rights. The most effective collections practices will generally involve skill and a certain amount of courtesy on the part of the collections agency. By trying to work toward a workable solution rather than berating or threatening a debtor, arriving at a satisfactory conclusion is much more likely.
Christian Debt Counseling ServicesConsumers seeking debt counseling services may be overwhelmed by delinquent charge card accounts, past due mortgages, or outstanding car loans. Buying on time, but not making timely payments ensnares many consumers who simply lose control of spending and soon find themselves facing financial woes. And falling behind on payments is no laughing matter. Harassing phone calls from creditors, threats of wage garnishments, or eviction notices and foreclosures can all drive debtors to the brink of bankruptcy. But before cash-poor debtors decide to take the plunge, contacting debt counseling agencies may help alleviate the pressure. Expert money managers are adept at helping debtors reestablish creditworthiness and bring balance to household budgets. Seeking professional counseling before credit problems get out of hand can deter debtors from taking a trip to the bankruptcy courtroom. Financial consultants provide personal budget planning and help delinquent borrowers devise plans to repay outstanding charge card accounts. Counselors may negotiate with creditors, such as mortgage companies and automobile lien holders, to reduce or defer payment on past due accounts.
While debt counseling services are committed toward helping consumers get relief from debilitating money problems, they also require a commitment from debtors to comply with resolution plans and not incur additional obligations while implementing workout plans. Some debtors simply have never learned how to manage money and have developed long-term habits which must be gradually broken in order to prevent repeating harmful buying patterns. A "shop 'til you drop" philosophy may feed a shopaholics need for instant gratification, but in order to get free from the addiction of consumerism, out-of-control shoppers need to put the brakes on buying. Financial management professionals can assess weaknesses in consumer buying patterns and help debtors amend their ways when it comes to out-of-control spending. Counselors may recommend cutting up credit cards to overcome the temptation to overspend.
Money managers can also work with creditors, such as mortgage companies and auto lien holders, to place delinquent payments at the end of long-term installment agreements. Deferring payments can save a debtor's credit report and keep negative entries from being filed. Debt counseling services actually benefit lenders by educating and rehabilitating poor credit borrowers. In the event of default, lending institutions really don't want to repossess homes or automobiles because they are not in the business of real estate or car sales. When homes and cars are repossessed, lenders have to sell property to try to recoup loan balances. Most property is sold at less than the amount owed on a delinquent account; and suing debtors for remaining balances after the sale seldom pays off the loan. By educating and rehabilitating high-risk borrowers, debt counseling services help prevent costly loan defaults. "Without counsel purposes are disappointed: but in the multitude of counselors they are established" (Proverbs 15:22).
People may assume that every adult knows how to manage personal finances, but that is not always the case. A credit card in the hand of an irresponsible individual is like placing a loaded gun in the hands of a child. Neither of them realizes how dangerous a loaded weapon can be! Not every housewife is a whiz when it comes to handling money and not every business owner knows how to balance the books and keep the company in the black. Sometimes, just sitting down with a counselor and going over income and expenses helps consumers get a handle on personal and corporate finances. Counselors will begin by assessing needs versus wants. Rent and mortgage payments, food, utilities, transportation, clothing, and insurance are all necessities. "Wants" include dining out, renting video games, getting a manicure or pedicure, playing golf, or indulging in a weekend excursion out of town. If expenditures don't fall into the category of needs, they can be eliminated. Consumers may also provide debt counseling services personnel with a listing of delinquent accounts, including past due federal and state income taxes, student loans, and unsecured and secured loans.
Once financial counselors have a complete picture of debtor assets and liabilities, they can construct a budget and repayment plan to meet monthly living expenses while satisfying creditor claims. Payment of secured loans usually takes precedence over unsecured accounts with no collateral. The goal of debt counseling services is to avoid the loss of collateral, such as a home, car, boat, or camper due to repossession or foreclosure because of a lack of payment. Unsecured creditor claims, such as charge account purchases, can be negotiated. Card issuers may be willing to reduce interest rates or late fees assessed against accounts, or settle for less money than is actually owed.
Professional Christian debt counseling services exist to provide consumers a way out of overwhelming money woes, hopefully without filing bankruptcy. The federal government requires bankruptcy petitioners to attend a credit counseling course from approved agency six months prior to filing for consumer debt protection. Once debtors realize that filing petitions mars consumer credit reports for up to ten years and prevents future financing, they are more willing to implement other methods of debt resolution. Independent consultants and debt counseling services present the pros and cons of bankruptcy to debtors, along with viable budgeting and repayment plans. To avoid falling off the wagon of creditworthiness again, consumers should apply sound financial management principles: Take care of personal needs first, don't buy what you cannot afford, get rid of most of the frills, and make consistent and timely payments on household bills, installment loans, and charge accounts. By following some good advice on how to handle debt, consumers can stay free of bankruptcy and rebuild good credit.