Delinquent Debt and How to Avoid It

person holding their empty pockets

Sometimes it feels like the easiest and only thing to do when confronted with difficult situations is to run away. But unfortunately, that usually just makes matters significantly and dangerously worse, especially when it comes to your finances. Credit delinquency is a terrifying topic and situation for many people every year. Why wouldn’t it be? Delinquent debt can follow you for years and wreak havoc on your future. But the good news is that understanding just what it is can help you find out the appropriate steps to avoiding it so you can set yourself up for a bright financial future.

Understanding Delinquent Debt

To put it simply, reaching delinquent status means that you have had unpaid debt for a long time, usually longer than six months, with no communication with your creditor. It is not exactly a criminal status as it sounds, but it does mean that your outstanding balance with your creditor, or creditors, has officially gone to a debt collection agency in hopes that they will be able to get it back on behalf of your lender. When this happens, you will likely start getting dozens of phone calls, voicemails, and maybe even letters saying that you need to pay off the balance as soon as possible.

This is what generally leads to people looking into debt settlement, as many with delinquent debt status often have multiple accounts that need to be paid off. By following some simple tips and tricks, however, you can avoid getting too far into debt so you can continue living your life financially stable and worry-free.

Always Pay the Minimum Balance

The best way to avoid debt is to pay it off as soon as possible. Anytime you have a loan, credit card, or another form of outstanding debt, you want to make sure you make payments as often and for as much as you possibly can. Even if you can only make the minimum payment every month, it will show your lender that you are staying on top of your finances and that you are actively trying to keep unpaid debt at the absolute minimum you can afford.

Maintaining a regular payment schedule also ensures that you keep interested charges lower. Whenever you take out a line of credit or borrow any kind of money from a company, there is interest (usually called APR) as part of your contract. Every month, interest is added to whatever money you don’t pay back immediately. So if you do not pay the balance in full every month, you will likely be adding more debt to your name. Even if you can pay a small portion of that balance, it will be better in the long run.

Maintain an Open Line of Communication

One of the biggest reasons people end up with delinquent debt is that they get scared of how much money they owe and fail to communicate with their lender. Debt is scary, but avoiding it is never the answer. Most of the time, your lender will understand if something unexpected comes up, and they may even be able to help you a little bit. If up until an unforeseen circumstance you have made great strides toward your debt, they may lower the interest rate, allow you to change your due date, or lower the minimum payments required.

Prioritize Your Debt

When you have student loans, personal loans, mortgages, credit cards, or other forms of credit, you should always make unpaid debt a main priority in your budget. Right after your essential expenses, such as rent, insurance, food, and utilities, debt should be the next thing that receives the bulk of your income every month. It can be easy to solely stick to the minimum payments or forego a payment altogether, especially if you feel like it is time for a vacation or a couple of purchases to treat yourself. While you definitely deserve to relax and partake in activities that help you destress, just remember that financial balance is the key to success, and it is never a good idea to get yourself into significantly more debt for temporary relief.

Consider Enrolling in a Debt Settlement Plan

While these steps can definitely help you avoid delinquent debt, sometimes life just happens and before you know it, it’s been a year since you could afford to make any kind of payment. If you ever feel like you are truly stuck in a financial hole and do not know where to go or what to do, there are options available. Never let the debt continue to pile up. Instead, opt for debt settlement help and speak to a debt relief consultant who can help you create a new plan. The most important thing to remember in this situation is that you are not alone, and even when finances become an overwhelming burden, there are resources available to help you overcome them.

Always Ask for Information and Assistance

Liberty Debt Relief has a highly credited and experienced team that is always available to answer any questions you may have. Whether you are simply curious about what debt relief options are available or have a lot of unpaid debt that you no longer know how to handle, we can help you come up with a plan. We will work with you one-on-one to make sure that you have the best possible financial future available to you and will be there with you every step of the way. Contact Liberty Debt Relief today to find out more about delinquent debt and what you can do to avoid, manage and overcome it so you can start living a more stress-free life.

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