Is Incurring Debts Good or Bad?

Having debts is inevitable in one's life. It has its own advantages and disadvantages; if used correctly, it will help you purchase necessary items and you can lock away the price of the item from increasing. But if used incorrectly, it will ruin your reputation and will give a long lasting bad impression from creditors and lenders.

Purchasing a house and lot today for an example will save you from price increase that may happen in the future. As we all know this kind of asset is continuously appreciating in value. So this kind of investment will definitely justify incurring debt just to acquire one even if you have to pay for it for many years.

Incurring debts is not really bad. Although the correct and advised way to buy the things that you need is to save for them. But when purchasing expensive assets like house and lot and cars, it will take you time to save for it and by the time you have saved the money to buy it, the prices of appreciable assets have gone up. Thus a mentioned previously, loaning to buy appreciable assets is one way to protect you from price increase.

Being a responsible debtor will also help establish your good reputation with creditors; you may not know it but each time you make a loan from banks, your credit history is being reported to established agencies. This history of yours will be the basis each time you make a loan in the future.

Having a good credit history has many advantages. If you have been paying your debts on time then this will show how responsible you are. It will help lower interests each time you borrow money and creditors will be happy in lending you the funds needed to purchase your needed items.

On the other hand, if you are an irresponsible debtor, this might lead you to various problems. Again it will ruin your reputation if you regularly miss payments. Soon you will be charged with high interest charges and worse no creditor will have the strength to lend you money because you have not been paying your debts on a timely manner.

So before you apply for a loan, use your judgment wisely. Do you really need to borrow money? Is the investment you are going to make will justify the interests that you will be paying? Will you be able to pay the scheduled payments on time? Is your job stable and so on. Basing your actions on these questions will help you make a wise decision if borrowing money will be good or bad.

Credit card abuse is one common pitfall that bury most people in debts. The temptation to buy things which are not really needed is great if you have a credit card in your wallet. So if you think you cannot control yourself from buying things that are not really needed then avoid applying for one. Keep in mind that prevention is much better than looking for a cure in eliminating your credit card debts.

Are you looking for a way on how to get a credit card easily? Visit this website by following the link at the end and find useful information not only to acquire a credit card but also on how to use them correctly and eliminating debts that are already troubling you - Eliminate Credit Card Debt.

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Greatly Improve Business Debt Collection Efforts With Asset Investigations

One thing that's tougher than collecting business debt from a debtor is collecting business debt from a debtor who has insufficient or no assets left to repay the debt. It makes perfect business sense to figure out whether the debtor, or the defaulter, has enough assets-that-will-repay to make the whole collection exercise worthwhile.

Through assets investigations, commercial collection agencies, with the help of private investigators, can figure the quality and value of the defaulter's assets, as well as dig up the locations and liquidity-capability information on those assets.

In order to protect assets from being tracked and possibly sold to fund repayment of delinquent debt, many defaulters will remove their assets and transfer them to another name, or they may even enter into bankruptcy proceedings. Because of this, asset investigation exercises must be conducted.

These are the common tricks of the trade, but a creditor does not have adequate expertise to figure out these malicious tricks. It may also be that the defaulter has no assets left to repay, in which case the creditor may well be wasting good money on chasing bad money.

Commercial collection agencies use asset investigations to uncover the financial status and any asset stripping actions of a debtor, making the entire exercise essential to success.

What Do Asset Investigations Cover?

A commercial collection agency will hire a private investigator from its network to find:

- Bank accounts, including Certificates of Deposit, Safety Deposit Boxes and Money Market deposits.
- Addresses and employment information.
- Real estate ownership information.
- Ownership of professional and business licenses (to zero in on current occupation).
- Court history (civil and criminal).
- Advanced investigation, if required.

How Are Asset Investigations Carried Out?

Private investigators are hired by commercial collection agencies to keep an eye on court documents in case of filing bankruptcy.

Time is put into uncovering and analyzing consumer, credit, real estate records, and commercial accounts receivable data. While these are all public record, analysis and negotiation based on findings require expertise and experience.

The private investigator takes on the task of tracking address changes, court history, and contacting anyone who may have more information.

A borrower's actions are closely monitored and checked for questionable activity, such as asset stripping.

Because the collection agencies keep up a good rapport with local authorities and lawyers, they know how to work their way through the government systems and use this relationship to get useful information.

Advantages of An Asset Investigation

Aside from getting in all the information detailed above, the process is completed surprisingly quickly. Commercial collection agencies can present all the required assets' information in a couple of days at the most, thereby allowing the creditor to move fast. A fast mover always has more chance of recovering his debt.

If the defaulter has no assets with which to make repayment, it may be in the best interest of the creditor to drop collection attempts temporarily. The creditor will pay the nominal fee for the investigation and end the process. Because the assets that can be used to repay the debt are also uncovered, the creditor has all the information available prior to embarking upon a debt collection effort.

The amount of time and effort that commercial collection agencies help save companies are enormous. Key company personnel can focus on revenue-generation rather than chasing bad debt collection.

CFOs and CEOs of an organization that is saddled with a whole lot of bad debt must naturally be keen to collect these and infuse the much-required cash in the company. They must hire a commercial collection agency to conduct an assets' investigation and then take it from there.

And also, explore more important information and resources on commercial collection agencies, in addition to collection agencies options.

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Can I Still Do an IVA If I Have No Disposable Income?

An individual voluntary arrangement is normally associated with regular monthly payments. However, if you cannot afford to make monthly payments we consider under what circumstances doing an IVA may still be possible.

An individual voluntary arrangement (IVA) is an offer to settle your unsecured debt with an amount you can afford. The settlement you offer is generally less than the full amount of debt that you owe. It is normally paid over 60 monthly installments.

The monthly payment that you make is determined by your disposable income.

You calculate your disposable income by taking your normal monthly income and deducting all of your reasonable living expenses. The amount remaining is your disposable income.

There is no minimum amount of debt that you must repay. However you will need to be able pay a reasonable amount for your creditors to accept your IVA proposal. Generally the minimum disposable income figure you will need to pay is £150 a month.

If you have no disposable income or it is simply too low to pay the amount required to make your IVA work then on the face of it you may think that you will not be able to start an IVA.

Lump sum settlement IVAs

If you have little or no disposable income, an IVA may still be possible if instead of monthly payments you can offer a single lump sum settlement.

The lump sum can come from any number of different sources.

One possibility is that it can be made available from a third party such as a partner, other family member or friend.

In effect they can lend or even give you the lump sum which you then use to settle your IVA. You can then agree to repay them under your own terms and in your own time.

Alternatively, the lump sum might come from the sale of an asset such as a property or simply the release of equity from a remortgage.

Protection from creditor action

One of the advantages of setting up an IVA is that once it is in place, none of your unsecured creditors can take further legal action against you to collect their debt.

For example if you owe money to the Inland Revenue (HMRC), unless this can be paid within a matter of months, it is likely that they could take serious action against you such as applying for your bankruptcy.

In addition, if you are a home owner, any of your unsecured creditors could take action to secure their debt against your property in the form of a charging order.

If you propose a lump sum IVA, the lump sum does not have to be paid straight away. It can be agreed that the lump sum will be paid at a later date for example when your property is sold.

Even though you are making no monthly repayments, an IVA will give you an ideal protective umbrella from your creditors until the time when your lump sum becomes available.

IVA possible without monthly payments

Based on the option of carrying out a lump sum settlement IVA, starting an IVA without the need to make monthly payments becomes possible.

In fact an IVA can be particularly useful if you are planning to sell your house or remortgage to raise a necessary lump sum but need time to do this.

Your IVA can start immediately and then will protect you legally until the lump sum is made available.

What to do next...

If you are struggling with debt, visit www.beatmydebt.com

Our experts are available to speak to you about your debt problem and offer advice and solutions.

Our vibrant debt forum gives free access to experienced industry experts and others who have suffered with debt problems.

Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.

James Falla is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Debt Management Plans, visit our website at http://www.beatmydebt.com

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