When you owe money to someone, it can be tempting to try and hide from them. Don’t! Cashfloat.co.uk, a short term loan company in the UK, discusses your options.
- Don’t ignore your debt – deal with it
- Try and settle the debt with your lender
When you borrow money – either from a bank or financial institution, or from someone you have a personal relationship with, such as a friend, family member, or business partner – establishing trust is very important. It is, after all one of the reasons that they allowed you to take out a loan in the first place.
During the first few stages of a loan application, you communicate constantly with the people you are borrowing money from. You have to convince them that they can trust you with their money. You have to convince them that you are honest, that you are capable of paying off your debt and that you really need the money. Terms are negotiated and laid out. When the money has been released, you offer reassurance and guarantee that you will be able to repay on time.
However, most lenders complain that after a while, the people they lent money to stop communicating with them and when they try to reach out to them, they are unable to. It may be because of a valid reason, such as an illness or relocation, and re-establishing communication becomes difficult. Or a more likely theory is that they ignoring and avoiding their lenders deliberately and the biggest question is, “Why?”
Why people ignore their debts
If you have watched or read Confessions of a Shopaholic, then you know that the protagonist, Becky Bloomfield, has a habit – and skill – of dodging calls from debt collectors. As the story unfolds, she even finds a (silly, yet genius) way of avoiding her debt collector in person, accusing him of stalking her, until she is unable to stop him from pulling the proverbial rug from under her feet and exposing her as someone who is knee-deep in credit card debt on national television. While most people may not be as desperate as Becky Bloomfield, there is a huge possibility that you have, at some point, deliberately ignored your billing statement or dodged a call or two from a collector.
There are many reasons why people dodge debt collectors or fail to communicate with the entity that they owe money to, but the biggest reason is because they are afraid to face the consequences of not being able to pay their dues on time. Not everyone is crafty enough to come up with a valid-sounding excuse, so they just choose to ignore their debts, disregarding calls and warnings, hoping that after a few days, they will not be bothered anymore.
There are also people who choose not to communicate with their lenders out of shame, because they simply cannot make the payments anymore. They (mistakenly) think that if they cut off communication completely, the other party will “forget” that they owe money to them. There are some people who go through great lengths just so their lenders will not be able to contact them, even going as far as changing all contact numbers and moving to another place.
While ignoring calls or simply “disappearing” from your lenders seem like an easy way out of your debt, it is not a good or lasting solution. If and when you cannot repay on time, the best way to resolve it is to stay in touch and explain your side.
What you can do?
Here are steps you can take to ensure that you stay on your lenders’ good side, without having to avoid them or worry that you will be pressured to pay when you are really not able to:
1. List down the people you owe money to
Enumerate, on paper, all the people and institutions you borrowed money from. Note the total amount that you borrowed and the amount that you still have to pay off. This not only gives you a good idea of how much you still owe, but also gives you the chance to budget accordingly, allowing you to see how much you have already paid. Seeing that you are able to pay can motivate you into saving up more or coming up with ways to augment your income.
2. Talk to them one by one
Yes, you read that right – pick up the phone or send them an email. If you have the time and the courage, you can even visit them personally. Talk to them and explain carefully and calmly why you have not been able to make your payments on time. Make sure that you are very honest with them, because after all, they trusted you enough to lend you money. Apologise profusely. Be prepared for the possibility that they will not honour or accept your reasons, no matter how valid. Do not get too emotional or too defensive – they are most likely to honour your proposition anyway.
If you will be unable to make the payments on time now or in the near future, let them know. Manage their expectations and ask them for a workaround. A typical compromise would be for them to allow you to make repayments at a time that is more convenient for you, but for an added fee or increased interest rate. If, however, they insist that you pay your dues on time with a penalty fee, then just honour their decision and do your best to pay. You do not want to be tagged as a delinquent by creditors, because it will ultimately reflect and taint your credit records.
3. Ask for help
Lenders – particularly, those in banks and other similar institutions – are financial experts. They will be more than willing to assist you in coming up with a plan to help you pay off your debts. Aside from this, they are more than capable of providing you with valuable advice to help improve your financial health.
Remember that when you owe money to someone, running away from your debt or hiding from your creditors won’t make your debt go away. The chances of them forgetting that you owe them money are slim to none. Therefore, should you have problems with paying off your debt, the best solution is still to communicate with them.
