Managing a loan that is difficult to pay back

For the most part, taking on debt comes with an agreement, that the consumer will pay the money back according to the terms of the loan. But there are definitely cases in which consumers can be exempt from the original terms or request debtors to cease and desist aggressive collecting practices for a loan that is difficult to pay back.

The first steps

Whether deliberate or a case of mistaken identity, more consumers today than ever before are being harassed by individuals and companies that try and demand repayment for a loan that is difficult to pay back. There are, of course, debt forgiveness programs, even by the government, and especially in cases where the loan is a student loan and the individual can show cause. This doesn’t even need to be a case of claiming bankruptcy. Collection agencies are well within their rights to pursue consumers whose loan accounts are in arrears – but [i]only[/i] if they can keep the consumers’ rights at the forefront. First off, a mailed notice must be sent to the consumer including information about the amount of money owed, the collection agency‘s name and a statement outlining on whose behalf the agency is collecting.

After a number of days, contact should be followed up via telephone, the number of days can vary from depending on where the consumer is located. Keep in mind that, in most cases, collection agencies cannot, without the consumer’s written consent, contact a family member, spouse, relative, neighbor or friend, unless they’ve received explicit consent or this person is the guarantor of that loan.

Consumer rights for a loan that is difficult to pay back

Whether licensed or not, any individual or agency harassing consumers for a loan that is difficult to pay back is breaking the law and a cease and desist letter is part of the a consumer rights. This is true even if the consumer has borrowed from so-called “loan sharks“. Threats of violence against the consumer or the consumer’s relatives, friends and neighbors is also unlawful and illegal behavior. Loan sharks are individuals or groups that are unlicensed to lend money and who specifically target low-income families and individuals. Consumers are not obligated to pay back loan sharks because they’re unlicensed and any claims made by the loan shark about taking the consumer to court or harassing them for a loan that is difficult to pay back with prosecution promises is likewise a lie. When dealing with debt repayment, however, make sure to never send cash, do not miss payments, and always get a proof of payment.

If loans are not paid back during a certain amount of time, credit counseling and debt consolidation services are always a great option for consumers that can help get their finances back on track. Organizations that offer free advice and resources are the first stop, before contracting any consultants, coaches or commercial services. Even with debt settlement companies, there can be scams. In general, exorbitant claims should be regarded suspiciously, including: companies that claim to be able to help consumers reduce debt by 50% or more, charging a large fee, upfront fees, or those that claim working together means no negative effect on a credit score.