As a debtor in New York or across the US, you can easily avoid the wrath of debt collectors by repaying your debt. This involves working with a reputable, well-established company that offers effective credit solutions.
You also need to familiarize yourself with the latest New York debt collection laws, or those relevant to your state, so you can be aware of your rights as a debtor. Dealing with debt collectors can be messy, especially since most will employ unorthodox tactics to recover their money.
We recommend learning how the debt collection procedure works. One of the common questions asked by many debtors is, “Should I pay the debt collector or the original creditor?” The answer to this and other important concerns lies in your understanding of the debt collection process.
Ways to Avoid Debt Collection
If you don’t like the incessant calls from debt collectors, you need to figure out a way to reduce your debts. Whether you’re getting personal loans or a business owner acquiring funds from credit institutions, you have to learn how to manage your debt to avoid collections.
Even if you’ve never been late in paying your debts, you might run into headwinds that will disrupt your debt repayment schedule, causing you to default on repayment. Here are some effective ways to avoid debt collections:
Prioritizing Your Debts
It’s not possible to pay all your debts at once, especially if you have several of them that are due. So, you have to plan your repayment schedule, prioritizing the most urgent ones.
When prioritizing your bills, you should differentiate between negotiable and non-negotiable debts. For instance, if your taxes are overdue, you can’t negotiate with the IRS to postpone your taxes. So, failure to pay your taxes will only get you into deeper trouble.
If you’re an employer, you need to prioritize your payrolls because they’re non-negotiable. Paying your workers on time isn’t a roll of the dice game. You’ll need their services to continue delivering quality products or services to your customers.
Furthermore, if you don’t pay your high-interest loans on time, they’ll worsen your situation. If you provided your manufacturing equipment as collateral, you risk losing it if you fail to repay the debt. Therefore, your secured business loan is a priority.
The only debts you can play around with are loans secured with a personal guarantee. You can negotiate with the creditor for more time since you’re personally liable for repayment.
Consolidate Your Debts
If your debts come with different interest rates, you can negotiate with the creditor to consolidate them. Paying in a lump sum will lower your interest rate. However, be careful with this method because sometimes, the money you spend consolidating your debts can be more than what you save in the end.
Therefore, make sure the money you save after consolidating your debts makes financial sense. For instance, if you have several credit cards with varying interest rates, you need to use one card to repay the other.
Nevertheless, go through the terms and conditions of each credit card to understand the fine print before you consolidate your credit card debt. In some cases, you might be subjected to a higher interest rate when the terms of debt consolidation expire.
Talk to Your Creditors
Reaching out to your creditors and explaining to them why you’re unable to repay your debts within the agreed timelines can spare you the hassle of dealing with debt collectors, albeit momentarily.
Some creditors understand the pain of managing several debts with a meager income, and are willing to extend your repayment period to give you enough time to clear the debt. For instance, if your business was impacted by the global COVID-19 pandemic, making it difficult for you to repay your overdue debts, you can explain the situation to your creditors.
If you owe your vendors or suppliers, you can sit down with them and come up with a win-win way of clearing your debts. However, be careful when reaching out to your creditors because some might interpret it to mean that you’re no longer in a position to repay your loans.
Go for Alternative Interest-Free Funding
As a business owner, you can avoid debt collection by obtaining alternative funds. The main options for alternative funding include debt factoring, crowdsourcing, and borrowing from friends or relatives.
Crowdsourcing is a perfect choice if your business has a social mission or it’s considered essential to the community. Debt factoring involves selling your unpaid invoices to third parties who will give you lump sums to help you clear your debts.
Lastly, you can consult a recognized and reputable credit repair company like The Phenix Group for advice on how to avoid debt collections!