What To Do When You’ve Overextended Yourself
No matter how careful one might be, circumstances can arise that leave even the most prudent individual scrambling for funds. Whether those circumstances involve emergency repairs to our home, replacement of a vehicle that has become a money pit, or fulfilling a commitment to help a relative, we all find ourselves at some point with greater expenses than assets.
In the worst cases, we might even find that we’ve exceeded our ability to make all our monthly payments, and left feeling like characters in a Dickens novel.
It is critical, when you find yourself facing more month than money, that you not merely sit back and hope the situation will resolve itself. It will, but not likely in a manner you would prefer.
Debt collectors are notorious for overstepping their bounds and misrepresenting their legal authority in their efforts to collect delinquent payments. Know your rights, as well as the collectors.’
What debt collectors can do to collect a debt:
– Call you at home or at work to discuss arrangements
– Send letters describing the debt and proposed repayment arrangements via post or courier
– Send a letter of default to the debtor
– Submit the case for court action if there is no attempt at resolution
What debt collectors cannot do to collect a debt:
– Call constantly, or at times you have told them would be inconvenient
– Call your employer, your family, and acquaintances with the purpose of embarrassing you
– Visit your home without your permission
– Repossess property without a valid court order
– Threaten you in any way
– Send letters falsely represented as official court documents
It is certainly preferable to avoid getting in debt over one’s head in the first place. No argument there. But if and when you do find yourself in such a predicament, and especially if you are beginning to receive contacts from debt collectors, check to see whether the collector is a member of the Credit Services Association (CSA), and ensure that it abides by their guidelines. The CSA also offers guidance on how to navigate the settlement of a debt.
Before it gets to that point
It is exceedingly rare for anyone to awaken one morning, only to realize that they have incurred debts, the payments for which exceed their ability to pay. Most often, and barring dire circumstances such as described above, the descent into a debt quagmire is a rather slow and incremental process. Most individuals don’t plan out a firm budget and consult it when considering every expenditure.
For most of us, it is a matter of tallying our “significant” bills against our monthly income, and striving to maintain a gap (in our favour, of course) between the two. Unfortunately, even those “insignificant” expenditures tend to add up rather quickly, and surprise us by eating away at that safety net we thought we had built into our finances.
A few too many trips to the bistro, the purchase of that outfit that we just had to have, and before we know it, we’ve run out of money long before we run out of month.
When you see yourself approaching that line, it is essential that you start being somewhat obsessive about keeping track of and staying within your budget if you hope to bring your spending under some semblance of control. It needn’t involve austere belt tightening; in all but the more severe instances, merely paying attention will be sufficient to prevent a worsening of your situation.
Sometimes, however, more aggressive action is required in addition to actually sticking within that budget. It might be to your advantage to consolidate some of your smaller loans, or even to refinance your high interest rate credit card debt. Sites such as Readies can help determine the best terms on whatever type of loans you need to make.
Even – no, especially – if you decide to consolidate several payments into a single loan, it is essential that you not view the resulting slack in your budget as being disposable income. To do so is to fairly ensure that you will end up in the same or even worse situation in the future. There are countless tools and services to assist you in better managing your finances.
The single core element, without which none of those tools or services will help, is your own willingness to act responsibly. Do your part, and there will usually be resources to assist you when the times are tough.
Category: Debt
