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No You Shouldn’t Just Let Debt Go to Collections

Almost everyone has some degree of debt and even the most conservative of financial planners would tell you that’s not necessarily something to worry about. It’s only when the debt becomes too much to control that it can all of a sudden ruin one’s finances. Yet, every year, countless people will allow debt they can’t pay back to simply go to collections. This is a terrible idea and here are five reasons why.

Debt Collectors Will Hunt You
That may be a bit of hyperbole, but if you become the target of debt collectors, you’ll soon find it’s not too far off. Debt collectors don’t simply forget about those who owe money .Their whole business model is built on being able to get people to pay. Sometimes, they’ve actually purchased the debt, which means if they don’t get you to settle it, they’re going to be out a lot of money.

Furthermore, in the Digital Age, debt collectors aren’t lacking for ways to find out how to get a hold of you. Some may even use less than reputable means to make life unbearable until the debt is settled.

However, despite what you may have heard, they can contact third parties to ask about your whereabouts. This could be your family members, neighbors, coworkers, etc. They can’t tell them why they’re looking for you, but most people figure it out, much to the debtor’s embarrassment.

Your Debt Will Be Passed Around
Even if you do manage to evade a certain debt collection agency long enough that they give up on you, the problem won’t go away. They’ll simply sell your debt to another company and then that organization will begin calling.

Your Credit Will Suffer
If your debt ends up in collections for even a day, this incident will end up on a credit report and hurt your finances greatly. Worse, this penalty will remain on that report for years to come. Even if you pay it off as soon as it ends up with a collector, that mistake is going to cost you a lot of opportunities for the foreseeable future. Whether it’s renting an apartment, taking out a loan or, in some cases, even getting a job, expect problems for a long time.

You Will Incur More Debt
The thing about a debt that goes into collections is it multiplies. For some reason, a lot of people suffer under the delusion that collections somehow put an end to the interest on the amount owed. It definitely does not do this. Although every state and lender/creditor has different rules, interest will continue and may even increase because of additional costs being added as penalties.

A Lawsuit Is Always on the Horizon
Collection agencies are surprisingly patient, but they also know that, at the end of the day, you are legally required to pay them. After you’ve given them the runaround one too many times, don’t be surprised if they decide to sue. Now you can add attorney fees to that stack of bills.

If you’re in debt, it’s essential you begin working your way out of it ASAP. Should the debt end up in collections, work with the company on a plan for clearing it. Most will be more than happy to figure something out.

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