Debts lead to a restless life. Paying back the debt as fast as possible is all we target. But sometimes life falls apart and you might be unable to pay the debt or you might be planning to make some investment. Thinking that missing on a few payments or keeping a few payments on hold is not a big deal. The other investment might be more beneficial to your business.
But you are wrong, doing so is not a wise decision. There might be chances that the creditor gets irritated or is in urgent need of money and hires a debt collection company. There might be chances that after you have made the investment suddenly all the creditors come for the money. That time you are helpless. Debt that goes a long way rarely benefits the business. In short, paying back your debt as soon as possible is a wise decision.
Here are 5 reasons stating why avoiding paying debts is not a good decision-
The debt stays on your credit report
Credit report is the document which includes the lists of your credit and loan accounts and your payment histories with various financial institutions and banks. Seven-year is the time limit when it comes to debt. After seven years, most negative items will simply fall off your credit report. The seven-year mark does not erase the actual debt, particularly if it's unpaid. You still owe your creditor even when the debt is no longer listed on your credit report. Creditors, lenders, and debt collectors can still use the proper legal channels to collect the debt from you.
It makes you a risky borrower
A high-risk borrower is someone who a lender or creditor would consider more likely to default on his or her loan. Once this mark is added in your report, no lender will trust you for lending money. Lenders are unable to trust your capability for returning the money.
A creditor will hire a collector for your debt
After too many attempts of chasing debt, creditors prefer hiring a debt collection agency. Debt collection agency puts all their efforts into getting back the debt amount. If you are unable to pay the debt that can sue you to the court. But if it is legit and an experienced debt collection agency in Atlanta you can ask for some concession for the payment. But if you keep avoiding them and not pay the debt they can sue you and if you defy the court’s order you might end up in jail.
Your credit score decreases
Your credit score depends upon a number of factors. Unpaid debt is one among them and lenders don't like to see charge-off on a credit report. Credit score declining ratio has a fixed pattern which is that for the first six months of unpaid debt it will drop around 100 points. But after 180 days it declines in such a way which is almost as bad for your credit score as a bankruptcy or foreclosure.
Interest rate increases
Creditor’s usually issued penalties and additional fees for delayed debt. In addition to that, the creditor might also raise the current interest rate of your debt. It will result in an increased amount of debt with each passing month. Due to which you might end up with a situation where you may not be able to pay the increased amount of debt and face a loss. If you fail to pay the amount. In that case, the new balance including the higher interest rate will be given to credit beauros. Overall it would not be good for your finances.
Eliminating the current debt should be your top priority because the consequences of not paying can end you up in serious problems. Get your debt resolved and then plan for a good business development opportunity. So, that low credit score and debt stress won’t hamper your current business development work.
But you are wrong, doing so is not a wise decision. There might be chances that the creditor gets irritated or is in urgent need of money and hires a debt collection company. There might be chances that after you have made the investment suddenly all the creditors come for the money. That time you are helpless. Debt that goes a long way rarely benefits the business. In short, paying back your debt as soon as possible is a wise decision.
Here are 5 reasons stating why avoiding paying debts is not a good decision-
The debt stays on your credit report
Credit report is the document which includes the lists of your credit and loan accounts and your payment histories with various financial institutions and banks. Seven-year is the time limit when it comes to debt. After seven years, most negative items will simply fall off your credit report. The seven-year mark does not erase the actual debt, particularly if it's unpaid. You still owe your creditor even when the debt is no longer listed on your credit report. Creditors, lenders, and debt collectors can still use the proper legal channels to collect the debt from you.
It makes you a risky borrower
A high-risk borrower is someone who a lender or creditor would consider more likely to default on his or her loan. Once this mark is added in your report, no lender will trust you for lending money. Lenders are unable to trust your capability for returning the money.
A creditor will hire a collector for your debt
After too many attempts of chasing debt, creditors prefer hiring a debt collection agency. Debt collection agency puts all their efforts into getting back the debt amount. If you are unable to pay the debt that can sue you to the court. But if it is legit and an experienced debt collection agency in Atlanta you can ask for some concession for the payment. But if you keep avoiding them and not pay the debt they can sue you and if you defy the court’s order you might end up in jail.
Your credit score decreases
Your credit score depends upon a number of factors. Unpaid debt is one among them and lenders don't like to see charge-off on a credit report. Credit score declining ratio has a fixed pattern which is that for the first six months of unpaid debt it will drop around 100 points. But after 180 days it declines in such a way which is almost as bad for your credit score as a bankruptcy or foreclosure.
Interest rate increases
Creditor’s usually issued penalties and additional fees for delayed debt. In addition to that, the creditor might also raise the current interest rate of your debt. It will result in an increased amount of debt with each passing month. Due to which you might end up with a situation where you may not be able to pay the increased amount of debt and face a loss. If you fail to pay the amount. In that case, the new balance including the higher interest rate will be given to credit beauros. Overall it would not be good for your finances.
Eliminating the current debt should be your top priority because the consequences of not paying can end you up in serious problems. Get your debt resolved and then plan for a good business development opportunity. So, that low credit score and debt stress won’t hamper your current business development work.
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