Published on November 7th, 2013 | by Pete0
Dealing With Debt Collectors
If you live in the western world, you will, statistically speaking, face a mountain of debt at some point in your life. It is entirely possible that you’re staring up at that mountain now. Don’t worry—that stomach churning stress you feel is common. This becomes even scarier if you get sick, can’t work, and haven’t been paying into your income protection the way you should.
Before you give in to the urge to change your name and run off to Belgium or somewhere (preferably a country without an extradition policy) to get away from your debt, read this article. We’ll teach you how to deal with your debts and to set up a system for repayment that won’t force you to eat canned beans for every meal.
First: Understand Your Rights
Most debt collectors—particularly if you are dealing with third party collectors who have purchased your original and “charged off” debts—count on you not knowing what they are allowed and not allowed to do to collect what you owe. Educate yourself on what constitute fair and unfair practices. For example, in the UK, debt collectors are allowed to visit your home to attempt to collect your debt. However, they have to notify you of their visit ahead of time and give you enough forewarning to allow you time to seek the help you need. They cannot simply show up. Furthermore, if you ask them to leave, they have to leave. (Source: DebtQuestions.Co.Uk)
Second: Consider Consolidation
One of the most common reasons that someone falls behind on their debt payments is that they simply forget about them. If you owe money to a lot of different accounts it’s only a matter of time before one of those accounts falls through the cracks. It might be easier for you to consolidate your debt into one monthly payment. There are third party services out there that will contact your creditors on your behalf and distribute your single monthly payment among your accounts. This is much better than having to sign an IVA, which these days is seen as just a step above declaring bankruptcy. (Source: Settle-My-Debt.co.uk)
Third: That Dreaded IVA
The worst thing you can do is declare bankruptcy so before you meet with a bankruptcy attorney, consider the IVA. Yes, we just said that IVA’s aren’t much better than a bankruptcy declaration but they aren’t yet on the same level and might be your only option. The setup is similar to consolidation but, with an IVA there are things that can and cannot be declared in the agreement and, more often than not, the agreement must be managed by an attorney (whose fees you will have to pay—and those fees are expensive). (Source: AdviceGuide.Org.Uk)
Finally: Learn to Budget
How did you get into all of that debt in the first place? Are you living beyond your means? The best way to figure that out is to set up and work out a budget that pits what you bring in against what you need to pay out. If you’ve never set up a budget before, don’t panic—there are lots of free tools you can use online to help you.
What matters is that you figure out a plan—not just to pay off what you owe but to prevent owing that much in the future. Good luck!