Avoiding Common Mistakes Of Debt Repayment

When it comes to repaying your debts there are two things you should know (1) your debts are your responsibility and should always be repaid to the best of your ability and (2) not all debt repayment options are created equal. In fact, there are many common mistakes people make when repaying their debts.

Not Negotiating

Many people assume that they have little recourse when it comes to negotiating their debts. What you may not know is that, as a debtor, you maintain the right to negotiate your debts with your creditor at any time. However, you may not always be able to secure an agreement between yourself and the creditor.

In any case, if you are experiencing financial trouble you have the right to contact your creditor and attempt to negotiate a debt repayment plan. Many creditors are willing lower your monthly payment, lower the interest rate on the account or settle for less than is owed. Before you file for bankruptcy or end up in a debt settlement companies office, try contacting your creditor directly to discuss your repayment options.

Using Third Party Companies

Debt collection companies make a living off of your debts. They are hired by your creditors to collect on the money you owe. They often act as middle men that handle the collection and disbursement of money for the accounts. However, remember that you are not required to repay your debts through a debt collection company and are free to repay your debts to your creditor directly at any time.

Although many debt collection companies are professional and act legitimately, not all can be trusted. Therefore, if you choose to repay your debts through the debt collection company be sure that (a) they were hired by your creditor and do represent them, (b) do not charge you any fees and get paid by the creditor directly and (c) are willing to provide you with documentation from your creditor that your debts have been satisfied.

Paying With Automatic Debit, Cash or Money Order

Many people make the mistake of paying their debts by (a) providing their personal banking information to a third party company or (b) funds that are difficult to trace and document. Never give a debt collection agency access to your personal banking information or debit card number. Instead, repay your debts using the secure online bill pay system set up by your creditor.

Paying off your debts in cash or money order can create many problems down the road. There is no receipt of these transactions, which makes tracing the payments difficult. If the creditor disputes they ever received the money, you will have little ability to prove the money was paid in good faith. Using a personal check to pay your debts provides you with a traceable and documented payment that can be used if any information is disputed down the line.