Helpful Tips for Avoiding Debt Collection

Helpful Tips for Avoiding Debt Collection

Things happen, right? People sometimes find themselves in the position of not being able to pay their debts. We have all been there at some point. Yet what a person does under such circumstances determines whether unpaid debts go to collection. Needless to say, avoiding debt collection is a smart thing to do.

When debts go to collection, it means that creditors have hired a debt collection agency to pursue unpaid bills. Having to deal with collection agencies is bad enough. But should a creditor eventually get fed up and take a debtor to court, general collection could turn into judgment collection. And according to Salt Lake City’s Judgment Collectors, that is something consumers definitely want to avoid.

Whether it is standard debt collection or judgment collection, make a point of steering clear of it. Below are some helpful tips for doing so. As you read, bear in mind that the common component that binds all of them together is good financial management.

1.              Live on a Budget

The most common mistake among people who find their debts going to collection is failing to live on a budget. Budgeting used to be a standard practice for American families. Unfortunately, we seem to have gotten away from it over the last few decades.

Establishing a budget is not hard. It is one of the simplest things you can do in the arena of personal financial management. The harder thing to do is live on the budget you’ve created. But doing so is the first step toward getting your finances under control.

2.              Limit Credit Card Debt

Far too many people find themselves in financial straits because they treat their credit cards like free money. They get so overextended with credit card debt that they cannot pay other bills. It is never a good situation. However, the solution is simple: limit credit card debt. Only use credit cards when you know you’ll have enough money at the end of the month to pay the bill in full. And whatever you do, don’t settle for making the minimum monthly payment on your cards.

3.              Communicate with Your Creditors

If you do find yourself struggling to pay your bills, be proactive in communicating with your creditors. Most of the time, creditors are willing to work with their customers. They would rather arrange workable payment plans than have to invest time and money in collection. Furthermore, they tend to avoid sending debts to collection whenever possible. Why? Because they have to pay for the service. When debts go to collection, creditors lose money.

The point is to contact your creditors and let them know you are having trouble. Work with them to establish a payment plan that will enable you to get caught up. Believe it or not, your creditors will probably bend over backwards to work with you.

4.              Stop Acquiring New Debt

Finally, it makes absolutely no sense to continue acquiring new debt when you cannot pay existing bills. New debt only compounds the problem. If you are having trouble keeping up, do not buy that new car. Keep driving your current car until it dies. By the way, you also don’t need that new phone with the unlimited data plan. Don’t buy it.

People who find themselves in the midst of debt collection tend to have one thing in common: they don’t practice sound financial principles. They do not live on budgets or control credit card spending. And when they do get behind, they don’t communicate with their creditors. You do not have to do these things. You can avoid debt collection by doing things the right way.

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