Business & Finance Credit

Creditors - Why Do They Invest In Your Debt?

A debt is a legal financial obligation that needs to be repaid to a lender or creditor who have invested a lot of money and have taken the risk to allow you to borrow some cash even if it will mean to them a great loss if you will not be able to repay the money that you owe and you end up defaulting the loan.
However, despite of the great risk associated with the lending business, still the number of creditors or lenders is continuously increasing.
The reason is simple - creditors, lenders or whatever they are called can make money out of your debt.
In fact, they earn even more from your debt if you are in default or you always fail to repay on time because of the extremely high interests and charges that they usually add to your credit account for not being able to pay them back when you were required to do so.
These are probably the major reasons why creditors are making a huge profit in the lending industry.
In addition to that, there are some other reasons why creditors are earning a lot from debts especially upon the default of borrowers.
Firstly, when you are in default of a secured personal loan from a bank, your creditor can foreclose your home, if it is the collateral for your secured loan.
They can also take your car or anything that you own that you have placed as collateral for your debt.
And while most credit card debts are not secured by any property, if you have unpaid credit card bills, your creditor can sue you in court and such lawsuit creates insured bonds and provides a credit rating before it is traded in the stock exchange.
They do not hesitate investing in your debt because they know that can earn a huge amount of money from the insured bonds or from lawsuits and judgment liens.
Some creditors will even offer you "settlement plans" so you will have another repayment option and making it appear that a different agency is offering the plan when in fact, it is still offered by your creditor themselves.
Your creditors are not like your friendly neighbor Uncle Bob who will just lend you some cash without having to worry about repaying it back right away because he will surely understand.
Most "creditors" act like they are angels sent from above to help you out in times of difficulties but they are actually evils who are playing their games against you.
They have no conscience and they do not care about you.
All they care about is their business.
As such, you should stay away from them as much as possible.
Do not easily give in to the plans that they offer that can get you out of debt because most of their plans are part of their business strategies.
They will just bury you deeper and deeper in a pit of debt.
The best way to go about getting out of a debt is changing your habits.
When you are used to spend lavishly, begin spending wisely, avoid making credit card purchases and managing your property and finances well.
That way, you will not end up in a situation where you will need to take out a loan or a cash advance to help you get by a financially difficult time.
Also, try using your credit cards only when cash is way out of reach or during emergencies.
Discipline is also an important factor.
Without it, changing your habits and all your other plans will not be possible.
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