Dealing with Delinquent Debt |
By Jessica Malitoris on July 6, 2010
.jpg.aspx?width=75&height=75) Delinquent debt can very easily bring down your credit score. On the most basic level, if you become delinquent, it means you have unpaid or outstanding debt.1 It is slightly different from normal debt because it is debt that has lasted so long that the creditor considers the account a lost cause—they don’t think they’re going to get any money out of you.
When looking at outstanding debts on your credit card, it’s easy to think that simply paying them off will make the problems go away. Unfortunately, an outstanding debt has already reduced your trustworthiness as a consumer, even before you pay it. Delinquent debt in particular harms your credit score because the company or person you owe money to believes they will not get money from you without having to track you down first.2
For creditors, tracking down those with delinquent debt can be difficult and costly, and for those who owe it, embarrassing. Fortunately, new websites now allow those with delinquent credit card debt or delinquent loans to repay online. Instead of having to deal with the discomfort of discussing delinquent debt with someone from the company you owe money to either in person or over the phone, you can easily make your payments over the internet. These websites can also be used to negotiate new terms and submit disputes, and are becoming increasingly popular.3
The most important things to keep in mind about staying out of delinquent debt are keeping control of your debt and staying in close contact with your credit company. If you can’t keep up with your current rates, call up the company to negotiate. Remember, the company would much rather work out your financial situation with you before you become delinquent than have to pay someone else to track you down after you already are!
Sources:
1 Guttentag, Jack. Pocket Mortgage Guide: 60 of the Most Important Questions and Answers About Your Home Loan. New York: Mcgraw-Hill, 2003, 82.
2 Ibid, 11.
3 Lindenmayer, Isabelle. “Bank of America, JP Morgan Use Web to Collect Delinquent Debt (cover story).” American Banker. Vol. 170.60 [March 2005). 1-5.
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