Debt collectors are those who collect the credit money from the borrowers. Debt means borrowing the money from lenders and [pay-off the money with some interest or tax after a given period of time.
The proper use of debt is a part of financial strategy. It helps you to enjoy those things which are out of your reach. Borrowing money also has a bad side. The wrong kind of debts which are too expensive can make you feel like living in a hell.
Strategies of borrowing a debt
Borrowing pays money. It is necessarily not bad if returned back on time, but you have to pay extra than you had borrowed. Here are some good strategies:-
- You should know that what amount you have to borrow and when. Borrow debt for those things which provides a long term value rather than limited enjoyment.
- Before borrowing, make sure that you are able to repay all the money with additional charges on time.
- Periodically review the debt
There are two types loan offered
Secured – at the time of issuing debt,the lenders want something as collateral which after solding, can pay the amount of debt
Unsecured – the debt is issued by the lender without any collateral but it is limited in amount.
At the time of issuing loan, you credit record plays an important role. Having a good credit is important while applying for a loan. Lenders always order the credit report before issuing the debt. Ant it will decide that additional charges applied. If you have a good credit, the lender will charge you less extra money.
What lenders are looking for?
- You employment record
- Stable residence
- Responsible handling of other debts
- Debt to income ratio
The lenders only lend money. These lenders may be a company or some agency. And to collecting this debt from the borrower they need a debt collector who will collects the money on time & get it back.
Debt collectors become debt buyers; the company buy the debts for the sake of face value & try to get it or recover the whole money.
If a borrower is unable to pay of his debt on time can be hit with his credit history. And all his debt will be returned to agencies within 3-6months by overdue payments of credit balances, utility payments, phone bills, back taxes, etc.
Companies find it easy to collect the money from clients through debt collectors rather than contacting them. Because debt collectors have the tricks from which they forcefully gets the debt money back.
An individual have right to generate a cease & desist letter to debt collector.From which FDCPA consider it as a letter of harassment. After receiving this letter, if agency still continues this, debtors can report to the CFPB.