A delinquent account is an account where the debtor has failed to make one or more necessary repayments to the creditor within a specified time frame.
Many creditor companies will immediately classify as delinquent an account that is more than 30 days past due for a payment. At that point, efforts are made by those companies’ collections departments to contact the debtor and attempt to convince them to make the necessary payments. If the account remains delinquent for over 60 days, those efforts may likely become even more urgent. In these early stages of delinquency, the creditors may be inclined to work with the debtor to establish reasonable and affordable repayment schedules.
Accounts that remain delinquent for longer periods of time are liable to be sold to third-party debt collection agencies, and largely forgotten about by the original creditor. That sale further damages an individual’s or business’s credit. These agencies also tend to be known for more aggressive tactics and have a poor reputation because of it.
Companies like Burt and Associates are exceptional, in that they actually attempt to work with debtors rather than intimidating them. They maintain an understanding of individual financial situations and strive to preserve goodwill between their creditor customers and their delinquent debtors. They carefully follow-up with debtors from the moment they take on a case and advise their creditor clients to do the same to avoid long-term delinquency in the first place.
Even debtors that have been in delinquency for a long time can be brought to the negotiating table to help them find previously unknown ways to make their payments.
Consequences of debt delinquency can include sharply reduced credit scores. That makes it much more difficult for delinquent account holders to receive credit at good interest rates in the future. In fact, just one recently-missed payment can be the single most important factor of an individual’s credit score; it can cause the score to drop by 50 to 100 points. The higher the score was originally, the further it is likely to fall in the event of a late or missed payment.
The consequences of longer-term delinquency can have legal ramifications, including civil or criminal penalties. For both consumers and businesses, the best ways to avoid letting debt accounts become delinquent include: maintaining sufficient cash reserves to make the next payment, avoiding taking on more debt than necessary, and making all payments as promptly as possible.