Often, missed bill payments are the first indicator that your financial situation needs revision. If you cut your payments close each month, it’s time to take a close look at your budget. If you’ve cut all of the unnecessary expenses but are still struggling to make timely payments, you may begin getting calls from creditors and bill collectors. When you start to fall behind, it can be tempting to ignore these calls, but you’re the only one you’ll end up hurting this way.
If you take the time to talk to your creditors, they may be willing to set up a payment plan for you or may even have some funds set aside for people with financial need. Doing so allows them to forgive a portion of your debt. They would rather receive small, steady payments than nothing at all. If you can’t come to an agreement, your debt may be referred to a collection agency. This could happen after one missed payment or could take months, but this action will show on your credit history and lower your score.
Dealing with Agencies
Creditors sometimes sell their delinquent debts to collection agencies, and other times they hire collection agencies to collect a debt on their behalf. If your debt has actually been sold to the agency, this may work in your favor. The agency buys the debt for a fraction of the total that you owe, which gives them some room to negotiate on collection while still making a profit. The downside to this scenario is that as the owner of the debt, the agency could sue you for collection. If the agency is collecting on behalf of your creditor, they must collect the full amount, but cannot sue you unless this action is initiated by your creditor.
Since many collection agency employees are paid by commission, they personally benefit when you agree to make a payment, which can sometimes lead to aggressive collection tactics. Having a bad experience with one of these employees may make you anxious to even answer your phone, but the agency may also contact you via email or by calling your employer or family members. If you are unable to work with the agency, at some point you will most likely be sued for collection and will be served legal documents at your home. When debt gets to this point, it’s clear that something needs to change quickly.
Financial stress can really weigh on you and affect multiple areas of your life and emotional health. There’s no need to go it alone or feel paralyzed in your situation. Bankruptcy can offer the relief that you need. Let’s meet so that we can discuss your situation and make a plan.