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Debt Collection - Part 3

Ahoy! If you have reached this page you're in a current and you need a steady hand to help you out of it. But you know what? The water might be deep, and the boat might be full of holes BUT you're still floating. Even if you're not quite sure how you're managing it, you are. And if you're still floating you still have the strength to get back to dry land. I promise. If you've faced debt collection, or are facing debt collection, you know that even if the sea out is rough, it's something you will sail. Why? Because it's worth it! Who wouldn't work hard, if it meant sleeping more easily at night? What if it meant financial security!? If it meant the shame of serious debt was a thing of the past that you learned from and in the end made you a better person?

Hole in the Boat: Bad Credit Rating

The frustrating thing about a bad credit rating is that the bigger it is, the less likely it is that lenders will be willing to give you the assistance you need to make it better. Of course if it was better to start with they would help you but then, you guess it; you wouldn't need it! If you have a significant asset you can sign to a bank or credit union as collateral, making the loan more secure, you may be more successful in looking for a loan. If your debt is small it may be easier to find a lender willing to give you a personal loan, where no collateral is required. If you have run up a large debt and have no collateral, there are fewer options left and I bet you can hear the flapping sails of the approaching debt collectors. This catch-22 of a bad credit rating is a very frustrating problem and something many people struggle with.

Fix:

There are specific financial lending programs or bad debt credit card programs targeted specially at people with a bad credit rating. Because people with bad credit ratings generally go from bank to bank to credit union being refused, when they do find a lender willing to give them a chance, they are more than willing to pay much higher than usual fees, simply out of gratitude for the opportunity. If you turn to this option as a final resort, use it to your best advantage. Bad debt credit cards may exploit the people they are aimed at BUT they are also a very good opportunity to improve your credit rating.

Wave One:

If you can, use this card to consolidate parts, if not all of your debt. Talk to a representative at the lending institution. That's what they're there for! Let them help you work out a schedule that you can realistically keep up with. Don't try to stretch yourself to the limit just to pay your debts off in 18 months instead of 24, or 5 years instead of 8. Be honest and don't cut out all the fun things in life. Joy rides are the best part of sailing! You don't want to go from being in debt to being a slave to repayments.

Wave Two:

If you can stick to your plan, the holes in your boat will start to close over. If you weren't able to consolidate all your debts in one go, consider consolidating as you are able to. You won't notice any significant change to start with. The debt will lower slowly, like water draining from a bath. Eventually, your boat will be dry. You'll be on top of your finances. You'll be floating like a bona-fide sailor. And look! It may not have been the most direct route possible, but you've made it to harbour. Not only that, but you've made it with a good credit rating: That is the benefit to be had from bad debt credit cards. They might charge higher fees, but they are willing to give you a second chance.

Welcome To Dry Land!

If you can manage and pay off your debt and continue using the bad debt credit card responsibly, you will most likely have improved your credit rating to the point that you are once again accepted in the fold of the "unaware" - although, of course, you WILL be aware and you will have all the more advantages because of it. In a world of plastic money, wages we often never physically see and electronic transfer, it's much more advantageous to know the lie of the land AND the sea, to harbour a healthy respect for both, than to be (however blissfully) unaware. As far as learning curves go, bad debt is a tough one, especially if you've had to deal with debt collection. But if you put your mind to it, anything is possible, even building a boat from two planks of wood (or working your way out of debt with a lot of hard work and some solid financial advice).