There are expectations when creditors lend funds to borrowers. The expectation is that the borrower fulfills all agreed loan terms and conditions. This is especially true as it pertains to repaying the principal and additional loan costs.
However, what happens if the borrower fails to live up to this expectation for whatsoever reason? Well, debt collection is a huge possibility in such a situation. It involves a specialized department in the creditor’s company or a third-party team facilitating debt recovery.
This can take several turns depending on the debtor’s response and the approach of the specialized team or third-party agency in question. You can click here for answers to frequently asked questions about debt collection.
The question is what borrowers with debt collection cases need to do. Getting an overview of their situation should be the starting point and is very important. Some of the reasons for this stance will be revealed here in this article. So, read on to find out more.
Importance of Getting a Debt Collection Overview
Debt collection cases can leave your financial state more complicated than it already is. As a result, you need to be very proactive about dealing with the situation. However, you need to understand what you are dealing with.
This is why you should get an overview of your debt collection situation. Some of the reasons for this are discussed below:
Ensures that You Have the Needed Awareness
You hate to hear the word “debtor” and this is quite understandable. However, the truth, hard as it is to admit, is that you are a debtor. Furthermore, you are a debtor facing a complicated situation.
On the brighter side, you can make the situation less complicated and even lose the tag “debtor”. However, it starts with understanding how much of a financial mess you’ve gotten yourself into. This is where the much-needed overview comes in.
It provides you with the needed amount of clarity. To provide a better perspective, it is more like going to a location that you have never been to but using a GPS map to find your way there. The overview is as important as the GPS map in this context. This is as you need it to navigate your way out of your financial mess.
By the way, getting yourself out of the debt collection situation and avoiding a more complicated situation will require either of two things:
For the record, there may be a need to implement both strategies in some cases as you would be unable to rely on just one of them. Well, getting an overview and critically analyzing it puts you in a position to know what needs to be done.
Informed Communication with the Debt Collection Team
For your information, this should not just be about getting an overview, which is very important as stressed early on. It should also be about understanding how debt collection processes typically play out. For one, this ensures that you are aware of the implications of certain things happening and why they should be avoided.
For instance, a debt collection case can degenerate into a legal tussle between the creditor and the debtor. More often than not, the debtor is at the receiving end in such situations and this should be avoided. However, this calls for understanding the processes and what needs to be done at various points in time.
By and large, communication and commitment are key in all phases and it is better if informed decisions are made. For example, knowledge of both the details in the overview and the typical debt collection processes puts the debtor in a good position to negotiate with the collection team.
Understanding of Protection Laws
Being a debtor is not necessarily a good thing as no one wants to be in such a position. However, you do not have to be entirely vulnerable even as one.
A good understanding of your rights and protection laws ensures that you are not taken undue advantage of. For example, there are such consumer protection laws in Norway, ensuring that the rights of consumers in the credit market are not violated.
Just as it is in Norway, there are also laws in the United States that address consumer rights in the credit market. These laws are enshrined in the Fair Debt Collection Practices Act. Just as it is in both of these countries, there are such laws in almost every part of the globe. Debtors need to understand these laws and ensure that there is no violation of their rights.
Understanding of Credit Impact
In the first place, debtors need to do all they can to avoid a debt collection case. For one, this is because of the increasing debt profile usually associated with creditors taking this route. However, there are more concerns than just increasing debt, which is enough trouble.
There is also the trouble of a negatively impacted credit score. You see, these cases do not leave people’s credit scores the same. This is especially true if the situation escalates to a certain point, which should be avoided. Understanding the adverse credit impacts:
Helps people see the need to make the needed sacrifices
Negotiate properly with the collection team
Do everything possible to avoid further credit score damage
For the record, the need to avoid the adverse credit impact is a crucial reason why these cases should not be taken lightly by people.
Avoiding Legal Consequences
These cases can degenerate into legal tussles between the creditor and the debtor as mentioned early on. Well, it is worth mentioning how this does not usually look good for the debtor for several reasons. Some of the results of the legal tussle can include the following:
Levy on Bank Account
For the record, these are just a few of the possibilities as there are several others. In most cases, the only point debtors may have when staring legal consequences in the face is that their consumer protection rights have been violated. Unfortunately, many of them have very little or no proof to back up this claim.
As a result, they usually stand very little or no chance when things get to this stage. For this reason, it is in their best interest that they avoid things escalating to this point.
On the brighter side, a debt collection case can be a financial eye-opener. This is especially true given how some debt collection teams show interest in the financial state of the debtor. As a result, they offer professional advice that can help navigate past financial misery.
So, you may want to take full advantage of this in your best interest. However, enjoying the benefits calls for commitment and willingness to make the required sacrifices.
You need to understand all the typical processes that debt collection entails. You can check out besterefinansiering.no/inkasso-oversikt/ for more information on this. Doing so ensures that you are in a good position to make informed decisions even as a debtor navigating your path out of debt.
For this reason, it should not just be about getting the overview alone. You need all of these things to properly understand the state of things and navigate your way out of your debt crisis. So, take note of this going forward.