What is Financial Delinquency, and how to get out of it?
What is Financial Delinquency?
A commonly used term in the banking sector, ‘financial delinquency,’ describes a situation when the individual runs behind on payments. Although this may happen for various reasons, your bank or financial partner might end up declaring the loan to be in default after a certain point in time. This declaration results in a severe dropdown of the individual’s credit score. And as a result, other banking sectors or privatized funding services may become temporarily unavailable to you.
In such cases, getting the help of professional financial delinquency services in UAE may be the last survival tip for you.
What happens when a loan is delinquent?
Depending upon your circumstances, some banks may offer certain relaxations until a set period of time. Generally, a duration of 9 months is allowed where the individual can revert back to regular payment after clearing out the withstanding amount. However, once the limit is passed, the officials mark your loan status as ‘Default’ and pass them to debt collection agencies. Afterwards, the debt collectors would imitate your pending amount initially through a call and arrange a meetup. But some agencies might also follow strict regulations for collecting the unpaid fund.
Similarly, the relaxation period by privatized agencies may be smaller, i.e., between 3–6 months.
How long do delinquent accounts stay on credit?
While there is no definitive proof as to how long this piece of negative information may be shown in your account, an approximate of 7 years is typically calculated. Moreover, even when the withstanding amount is paid up before the final relaxation period, the dropdown in your credit report will still be visible to potential lenders. As a result, your candidacy might be categorized as ‘suspicious’ or ‘regular defaulter’ when applying for new loans. Here, the only positive thing would be that your account status would be ticked off, and it will show ‘Closed/OK’.
Therefore, to avoid such instances, financial experts often advise maintaining regularity in making payments.
Tips to reduce delinquent loans with better payments
Similar to what discussed above, the only answer to preventing financial delinquency is to regularize your payments. A better way to make sure you never miss your payments is to identify the blockers. Here blockers mean conditions or factors that might be affecting your repayment behaviour. Below are some of the common financial blockers.
● Technology issues or server downtime
● Forgetting the repayment date
● Not knowing the exact amount or details of the loan account.
So, here are some tips that can come in handy while trying to follow good repayment behaviour.
Opt for automatic payment methods with less failure
A huge 34 per cent of individuals complain about server downtime, and credit card read failures during the crucial period. Thus to stay safe from such instances, it is always better to opt for other payment methods. One of the preferable methods is to sign in your EMIs through direct debit. Comparatively, failure in direct debit systems is reportedly much lower as compared. Even more, it also comes with the advantage of tracking, which helps in pointing out all successful payments.
Likewise, standing orders and bank transfers are other paying method with a high success rate. However, the problem is with their lack of visibility of past and recent records.
Setting up a payment reminder
As old school may seem, setting up reminders has been found to aid in regularizing payments in many. Nowadays, many private lenders and central banks send payment reminders directly to their registered contact details. Typically sent 4/5 days prior, there is still a chance that the borrower might forget to make the payment at the perfect time. A simple solution is to synchronize your smartphone or Google’s calendar with the EMI date in such cases.
Additionally, experts also advise setting up the reminder for the day before, as it allows some time for you to prepare the required funds. Or else you can mark up the date in a physical calendar to never miss a repayment date ever again.
Informing the authorities
Finally, if your credit profile is completely clean, some financial lending institutions might also go a step ahead and offer you a moratorium period. This time period is decided upon the urgency of the situation and might also save you from being reported as ‘Defaulter’. While this step has the rarest possibilities of being implemented, there are no disadvantages when it comes to informing the concerned authority about your situation.
Similarly, taking the help of professional financial delinquency services UAE is also beneficial if you have a high withstanding amount or haven’t paid for a long time.
Conclusion
If you’re still unsure how to deal with it, consider taking help from an expert from Capital Hills Dubai(United Arab Emirates). You will get timely and efficient advisory for debt and delinquency to keep yourself out of any financial trouble.
