Loan and its after effects are well known to all. But that has hardly stopped people from taking loans for various reasons. If anything, the number of people taking loans has only increased. The way our economy is plummeting, there is hardly any way of keeping body and soul together but to go for these loans.
Taking a loan does not end the story as it has to be repaid and this is the harder job. So, when you take a loan you must have a back-up plan ready for paying it back. Once the repayment period starts, all you have to do is pay monthly installments. You can read Negotiate and Settle Your Debts: A Debt Settlement Strategy by Mandy Akridge to learn more strategies on settling your debts.
You fail to make a single payment and your loan becomes defaulted. In the case of federal loans, however, you have the option of a delinquency period. If you fail to pay after this period, your loan will become defaulted and all you can do is take the help of the loan assistance program to improve the situation.
Once your loan becomes defaulted, the lenders transfer it to the collection agency. The collection agencies make sure that you pay the loan back and quickly. They can do anything from calling you at your home and at your work place to publishing your name in the defaulters’ list. It is true that the FDCPA has stopped them from calling at all odd hours and from contacting you directly if you are already represented by an attorney. Also, since they work on a commission basis, they are very efficient and get the work done by hook or crook. The lenders make you pay the extra money by increasing the amount of your debt.
To avoid the consequences of a defaulted loan and collection harassment you have to make sure that the monthly payments reach the lenders on time. The best option is always to keep the loan amount well within your annual salary. Before you apply for a loan make the repayment plan. This will help you once you begin the repayments.
When your loan does become defaulted, the first thing that you must do is talk to the lenders. This might sound crazy but they are the only people who will be able to help you in this situation and give you the right advice. If you are unable to pay the high monthly installments, then you can apply for an EXTENSION. This will allow you to pay the loan back in easy installments for a longer period of time. If you have a lot of loans to pay back, and you are unable to manage so many installments, then you can CONSOLIDATE them and pay a single monthly installment that will take care of all your loans. If you are unable to make the regular monthly repayments for the time being, then you can apply for a loan DEFERMENT. This will allow you some time to sort your financial situation and then start the payments.
There are ways if you want to avail of them. All you have to do is take help from the right people at the right time.