At the moment, people have a lot more debt than they had before. The reason for this is easy loans online. The main reason for this heavy indebtedness of people has been the rapid spread of landings from the United States to Finland, which became more common after 2005.

It was easy to get a loan right away on the internet and many were intrigued by this free money, which was cleverly made by quickly applying online or sending an SMS. Indeed, many people took out loans of a few tens or hundreds, which grew into a large loan of several hundred or even thousands of dollars because of the neglect of billing and rising costs and interest rates. This led many to take out more loans to pay off their old loans, and then the debt cycle was over.

However, in 2013, the government set an interest rate cap, which stipulated that loans below USD 2000 had a certain maximum interest rate. Fortunately, some companies that provided instant retreated leashes, but some companies only changed their operating model and started offering larger, more than USD 2,000 flexible loans. Thus, people were allowed to take larger loan amounts in their name but only used the amount they wanted. This system wound around the interest rate ceiling neatly.

Now many are indebted and have lost their credit history. Debt collection has become familiar to some, and some will certainly be wondering what recovery really is and how it works.

In this article we look at how debt collection agencies operate and how the debt collection process works.

Recovery begins immediately after the due date

Recovery begins immediately after the due date

If the invoice has not been paid, the recovery process begins immediately after the due date. But you don’t have to worry right away, because the bailiff won’t automatically carry your couch out. Namely, all payment reminders and prompts are also counted as a recovery process.

If the invoice has not been paid by the due date, the first contact is the payment reminder. This is how the creditor or debt collection companies try to determine the debtor’s willingness to pay. If you pay the bill after the reminder, you will not suffer any major consequences. However, if you do not pay the invoice, you may be sent a payment request. Each individual reminder and prompt increases the amount of debt, as payment reminders are usually billed more.

Reminders, prompts and demands for payment are part of the voluntary recovery process. Here, the creditor attempts to collect debts voluntarily from the debtor and usually settle the debts without the help of debt collection services. However, sometimes the debt collection agency may be involved in this process as well.

If the debtor has not yet paid the debt at this stage, the debt will go to legal recovery, where the district court will execute the judgment. Usually at this stage, there is also contact with the recovery. Debt collection companies are very willing to settle their debts before they go to district court, so it is a good idea to be in a position to work with them.

When do I receive a default payment entry?

When do I receive a default payment entry?

Defaults and credit loss are very common and a large part of the recovery process. You will not lose your credit history on just one reminder of a payment, but if debt collection goes to trial and recovery, you can often expect to lose your credit information at this point. The sooner you pay off your debt, the less chance you have of being insignificant.

Defaults have a major impact on people’s economy and life. For example, if you have a defaults entry, you can’t borrow, rent an apartment, rent a car, get credit cards, or pay in installments. Even getting a regular phone connection can be very difficult.

The default payment record is good for credit depending on the size of the debt and the severity of the matter. Usually, however, the note will remain in the credit history for 2-5 years, after which it will be removed.

What to do if you have too much debt or can’t pay?

What to do if you have too much debt or can

The creditor’s main interest is getting his debt. If you are unable to make the payment by the due date, you should contact your creditor well in advance of the due date. You can often agree on a new maturity date with the creditor, and this does not always entail any extra charges. Postponing the due date is convenient for many, as long as it is communicated well in advance and the new agreed due date is adhered to. Sometimes the creditor may charge a small charge for postponing the due date.

Another option is to request payment in two installments. This may be easier for you and the creditor may agree to do so.

If you have already received a payment reminder, please remove the payment as soon as possible. You have to pay the cost of the reminder, but it is usually only five dollars. If you receive a recovery letter or claim, you should contact the debt collection agency directly and agree on a payment plan. Creditors are happy to settle the debt directly with the debtor, so that they do not have to go through a lengthy recovery process that is time and money consuming.

The best way out of all is to be honest with the creditor about your financial situation. Tell them what the right situation is and when you think you can pay off your debts. Remember that you must always pay off your debts, and only in very rare and serious situations you will be able to apply for debt forgiveness or bankruptcy.

How to avoid over-indebtedness?

How to avoid over-indebtedness?

People owe debt because they have too much spending and not enough income. Often, in such cases, there is just too much debt, ie one is over-indebted. The most effective way of avoiding debt recovery is to avoid debt collection. It is always a good idea to try to pay all the fees directly from your bag instead of applying for a small loan to pay for the acute costs. Getting into a debt spiral is very easy, but getting out of it is often the result of work and pain.

Instead of applying for a loan, consider whether this expense is mandatory. If you don’t have to pay for it, leave it alone. However, in the case of an acute payment or, for example, car maintenance, consider pinching other costs until you have paid the acute cost. Another option is to take a little extra work and pay for the acute cost in question with the money you have received for overtime.

Sometimes borrowing from a friend or parent can be a better idea than borrowing. Although friends and family will have to repay their debts, at least they rarely take the case and perhaps avoid high interest and expense.


It is a good idea to avoid claws and teeth. During voluntary recovery, you can still easily settle debts with a creditor, get more payout time and settle your debts. The more willing you are to work with a creditor, the easier things will be.

However, if you avoid the situation and have a legal recovery, your credit and finances will be hard on Warranty. Debt can go out of business and you may lose your credit for many years.

The default payment record will remain in your credit information for years. Therefore, it is better to settle the debt with the creditor rather than save your own expenses until the debts have been paid. Remember that the best way to avoid being charged is to always not take any debt.

You should rather consider whether you need to pay for that expense: maybe that jacket can wait until the next payday, or you can postpone car service for the next month. However, if the expense is very acute, it may be a good idea to seek help from a friend or your family, for example. This way, at least you don’t have to pay expensive expenses and interest, and your family won’t take you down because of the extended payment period. Carefully consider taking on debt as it can, in the worst case scenario, taking you away from your credit history and getting you into a long and painful debt collection process.

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