If you are financially able to repay your debts, consider yourself lucky. Many people are experiencing extreme financial hardship that leaves them without the ability to repay their debts, putting them at risk of foreclosure or bankruptcy.
Repaying your debts through a debt collector can provide many benefits to your financial situation, however, you should know that there are some wrong ways to go about satisfying your debts.
Many debt collectors will request your personal bank or debit card information as a way to “expedite” your payments. They may claim that your debts will be easier to manage or you will be charged less payment fees. The truth is, your debt payments should be controlled by you completely and you do not need to invite a debt collection agency into your bank to do that. Never give your personal bank or debit card information to a debt collector. Instead, request the contact information for an online payment system, or by mail, and make each monthly payment yourself.
With so many credit card companies offering no-interest balance transfer options, it can be tempting to take out another line of credit to pay off another. Even at no-interest for a specified number of months, you are still at risk of large interest fees when the trial period expires. Even worse, when the interest rate does begin to apply, your minimum monthly payment on the new card will likely be as high as the account you “paid-off” . It becomes a vicious cycle that is difficult to break. The best way to repay your debts, is with cash flow from your monthly income.
For people who do not have an active bank account, or have trouble accessing their funds, a money order may seem like a good option for repaying debts. The problem is that money orders and cash are difficult to trace and there is very little documentation to prove the payment was made. It is important that you can track and document payments made on your debt accounts. A personal check or online bill pay system is traceable and will provide you with the documentation you need to ensure the payment was received by the creditor.