Paying Off Past-Due Debts
Author: Consumer Credit Management Services
Financial problems aren't necessarily the result of poor money management. Sometimes situations beyond our control, such as divorce, death of a spouse, loss of job, health problems, illness, disability or a change in household income, can lead to financial hardship. Many times we don't see the signs of a financial crisis until it's too late. Financial crises don't occur overnight.
Here are five warning signs that would indicate that you're headed for financial trouble:
- Paying bills late
- Transferring balances from one credit card account to another in order to obtain lower interest and payments
- Depending on overtime at work to cover minimum monthly bills
- Hoping that checks you've written don't clear the bank before payday
- Borrowing from friends and relatives to cover basic living expenses
Dealing with unpaid debts
When financial problems arise, you should understand what actions can be taken against you. Some of the Consequences of not paying your debts; such as:
- Foreclosure
- Eviction
- Utility shut-off
- Automobile repossession
- Past-due taxes
- Bankruptcy
Dealing with unpaid debts
All debts are not created equal. Some debts are more important than others. As a consumer, if you are having trouble paying your debts, you need to understand what debts are important and need to be paid. Some debts, if they go unpaid, could have server consequences in your life. There are 'essential debts" and "nonessential debts." Let's take a moment and review them:
Essential Debts: These types of debts are more important than nonessential debts. If you don't pay them, you could be headed for serious financial and legal problems.
Nonessential Debts: These types of debts are not as important as essential debts, but they still need to be paid. Some of these debts could cause damage to your credit report if they go unpaid. They could even trigger collections and possible legal actions. Always try to pay your bills.
Collecting on an unpaid debt
The U.S. Fair Debt Collection Practices Act (FDCPA) requires that debt collectors and collection agencies treat Debtors (you) fairly by prohibiting certain methods of debt collection. Of course, the law does not forgive any legitimate debts owed.
Debts that are personal, family and household debts, are covered under the FDCPA. This includes money owed for the purchase of an automobile, for medical care, or charge accounts.
A debt collector can be a collection agency, or any person or entity, other than the creditor, who is in business to collect on debts owed to others. Attorneys can also be a debt collector. A debtor collector may contact a debtor (you) in person, by mail, telephone, telegram, or fax in order to collect on an unpaid debt. The debtor collector may not contact you within unreasonable hours, such as before 8 a.m. or after 9 p.m., unless you agree. To learn more about the FDCPA you can visit at www.ftc.gov/bcp/conline/pubs/credit/fdc.htm.
