Debt is an insurmountable problem for many people. It’s so common, that 1 in every 3 Americans holds debt in collections. Before we get into the nuts and bolts of debt management, it’s important to accurately define debt.
The Business Dictionary defines debt as, ‘…A duty or obligation to pay money, deliver goods, or render service under an express or implied agreement.’ Debt is far more common than you may think. All forms of loans, credit cards, personal financial obligations, and repayments fall under the debt umbrella.
The Urban Institute has calculated that the average debt owed by Americans is $1,450. Unfortunately, many folks are ‘harassed’ by debt collection agencies a.k.a. creditors to repay their debts at all hours of the day and night.
These calls are nerve-racking – they catch you when you least expect them, and they add pressure to the pressure you are currently feeling. Nobody likes to be hounded about debt obligations, especially when they are struggling to make their monthly repayments.
Fortunately, there are ways and means to stop these harassing calls once and for all. It is foolhardy to employ techniques like changing your address, changing your telephone number, or simply throwing away your mobile phone to stop these calls. There are far more effective ways to tackle debt head-on.
How Far Can Debt Collection Agencies Go?
In the United States, there are laws in place to protect people from being harassed from credit collection agencies. Leading financial resource, DebtConsolidation.com indicate that 85% of people in 2017 were contacted by debt collectors via telephone.
- 71% of consumers were contacted by debt collectors via letters in the mail
- 57% of consumers were contacted by voicemail on their answering machines.
Other options employed by debt collection agencies include email and in-person visits. These amount to just 12% and 4% of all debt collection methods. What many consumers don’t know is that debt can be managed effectively.
According to the Fair Debt Collection Practices Act, borrowers have rights. There is no legal precedent for collection agencies to verbally or physically threaten or intimidate consumers. They are also not allowed to withdraw funds from your Social Security income if you happen to be retired.
Take A Proactive Stance To Debt Management
A budget is the most useful resource when managing your finances. Budgets indicate how much money is available for each expenditure category. Budgets allocate funds to living expenses, entertainment, student loans, vehicle maintenance, etc.
Once you can see where money is being channeled, it’s easier to manage your finances better. It’s important to stay abreast of the latest updates on your money matters.
Check your credit reports and your credit card statements frequently. Any anomaly (a payment you don’t recognize) should serve as a call to action. If you notice that one of your accounts has become delinquent, contact the creditor and take a proactive stance.
Sometimes, you may be able to transfer existing debt from a high interest account to a 0% interest account through things like debt consolidation options. This is increasingly common in the personal debt management arena.
It’s always important to understand precisely how much you are owing so that you can stay ahead of the curve. If your debt obligations are insurmountable, you will need to have a debt management plan to avoid a snowball effect over time.
Sometimes the best technique to employ when creditors come calling is silence. Don’t take their word as holy writ. You may not know it, but there is a statute of limitations on credit card debt in each state.
Outstanding debt between 3 – 6 years may expire, regardless of what the credit collection agencies are telling you. Even if a credit collection agency buys your debt, they cannot extend that statute of limitations.
These tips are designed to help you understand your rights when managing your debt and dealing with annoying collection agencies.
Hi, my name is Jon and I run Compounding Pennies. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.