Taking out a loan has become very easy since FinTech has changed the online lending criteria. Borrowers can fund their needs despite impaired credit standing. You just need to submit an online application and you get funds the same day. Short repayment period helps you get rid of the debt quickly. Does it really as easy as it seems? You would have understood if you had taken out a bad credit loan online with instant decision.
Poor credit rating discourages you from taking out the best deal as they are exclusively available for good credit borrowers. No matter which small loan you apply for, you will end up paying relatively higher interest rates in case of a bad credit score. These loans come with small repayment period, usually not more than a month. If you fall behind repayments, the lender will add in late payment fees and interest penalties. If you continue to make defaults, the lender will entrust you to a debt collection agency.
A debt collector is a person deputed by the lender to collect debt from you on their behalf. The case can be serious once the debt collection agency comes into the action. Dealing with them is very daunting when you do not know how to deal with it. Here are some tips dealing with debt collection agency:
Know your rights
Debt collectors cannot annoy you by calling and sending messages and emails on and off. According to best debt collection practices, they have to follow a protocol to get money out of your pocket. You can stop them from calling you persistently or you can set a communication method, either text messages or calls, and schedule the time if you opt for the latter.
A debt collector is requires to submit a proof that you owe debt and you failed to pay back. They cannot call you before 8 in the morning and after 9 at night. They will talk to you on scheduled time. If you are unreachable, they have the right to call your family and friends to get a line on you. However, they cannot disclose your debt to them.
Do not live under a rock
If you have been receiving phone calls, notices, emails and text messages, do not ignore them. A debt collector is trying to be in touch with you to collect funds on behalf of your lender and it is legal. Do not cut off all communication methods. Otherwise, the collector will assume that you have no intention to pay back money. As a result, the lender will pursue rigorous approach. If you cannot afford to pay off the debt, you should immediately inform to the collector. They will try to convince lender to issue a new repayment plan. You will be given a grace period depending on the lender’s policy for settling the whole of the debt.
What if you fail to pay back within the grace period?
Debt collection companies can seize your possession to recover money. However, this is the last resort. They are not allowed to take your clothes, furniture and tools for work in custody, but they can seize luxurious items. At the end, the lender may issue a county court judgement against you. You must remember that the lender will inform credit reference agencies of your negative behaviour. This will not only damage your credit score, but also shut you out of taking out even a bad credit loan down the road.
Once the matter goes to the court, the jury will decide how much money you will pay out of your wages and for how long. The court will be entirely responsible for making arrangements.
A piece of advice
If you take out a bad credit loan with a reliable lender, you are not likely to fall in debt provided you consider your repayment potential before filing out the application. The rule of thumb says that you should seek these loans only when you have emergency. Do not take out them to fund your bad habits and regular expenses such as groceries. Make a budget to confirm that your expenses are lower than your income. As long as you have net worth, you could pay off the debt easily.