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On Missing Payments to Creditors and Debt Management Companies

April 17, 2012 | Comments: 0 | Views: 199

For every action there is always a reaction. This is a natural law that no one can deny. If you have done some serious mistakes, you would certainly see how true this principle is as soon as you get to encounter the consequences. This is the reason why you should always think twice over the actions that you are going to make. This is particularly true when it comes to your debt payments. Whether you are supposed to pay directly to the creditors or to the debt management company, you should never try missing a schedule. Otherwise, you would have to bear the effect, which would definitely burden you further.

It is common practice for debt management firms and creditors to impose a fine for non-payment or for skipping a schedule. This fine is going to be added to the payments that you are going to make for the principal amount and the interest rate. This obviously means one thing; you would be paying much more than the money that you actually got as loan. Therefore, you are putting yourself at a worse disadvantage for missing a payment. You could be having a tough time repaying the principal amount and the interest rate. Getting penalized for missed payments would certainly be like squeezing lime over a fresh wound.

The immediate effects of the penalty are not the only thing that you should worry about. Any delinquency in debt payments does not escape the prying eyes of the institutions that give the credit score to individuals. If you are found to be missing your payments, your score would surely be reduced to embarrassing levels. Actually, embarrassment is just the least of your concerns here. What you should really worry about is the impact of a low credit score on your financial situation.

Unless you have won the lottery and have started a business that is doing very well, you would certainly have great difficulty in repaying your debts, along with the interests and penalties. You may have a salary but this may not be enough, considering that you also have the regular expenses to attend to. So what happens next is that you would be wished to a point a where you would have no other recourse but to seek fresh loans. However, the creditors would no longer be lenient or kind to you once they find out that your credit score is not something that you could be proud of. They would certainly deny any request coming from your part.

You have debts to pay and these would make the value of your salary drop sharply. But you could no longer make fresh loans or even use your credit card just to make ends meet. Such situation is indeed one great crisis that you should avoid. Once you get into this, it would be more difficult for you to solve your debt problem. This is why you should always make it a point to repay your debts on time and avoid missing a schedule.

Jim Oneil is a writer with a special interest in debt issues and personal finance. He has written for small local newspapers in the past and now devotes part of his time writing about debt consolidation and management as well as UK based financial products.

Source: EzineArticles
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