Koekie

Step 1 – Get over the initial shock and treat it as a normal letter.

Both of these actions can create costly delays or worse if the letter is not dealt with promptly. So the first step is to ignore your emotions around receiving it and treat it as you would any other official correspondence. Read it through carefully to ensure that you are liable for the debt and make a note of the sender.

Depending on the kind of debt, the business or individual to whom you owe the money may have employed someone else to write to you. This could be a debt collection agency, or a legal firm, most likely a solicitor. In extreme cases, the letter may be from a county court, or bailiff’s office – if the debt has already reached that stage.

Step 2 – Treat this as a business transaction

Once you have established that you are liable for the debt in question and know who you are going to be dealing with, you need to map out a course of action as you would in any business transaction. The reason being that from the perspective of whoever it is who has written to you, this is part of their day to day business and they want your part in their job to be settled as quickly as possible.

With that in mind, you need to decide what you are able to do to pay off the debt and this needs to be both practical and realistic. If you do not believe you are liable for the amount written in the letter, we will be looking at the best way to deal with this further down. But for now, let’s assume you agree that you do owe the money and want to pay it back as soon as you possibly can.

If the amount owed is able to be repaid without causing you financial hardship, simply contact the person who wrote to you and agree on a way to pay it. Once that is done, make a note of any references and confirmation emails and also get a record of the transaction via your bank as proof that it has been paid.

Should you not be in a position to pay it, you need to find a way to either delay its repayment or work out a payment plan you can afford. If the letter to you was written by a third party, this may not be as straightforward as it sounds as they have been employed to recover the full amount and that is what they have set out to do. With that in mind, keep all your correspondence in written letter form. This gives you a clear record and avoids intimidating tactics that may be used over the phone.

If you are comfortable initiating a repayment plan yourself, write to them offering what you can afford to pay and when. This should be backed up with a realistic breakdown of your current financial status in terms of income and expenditure. Provided you have given a true account of your circumstances, you may find the party concerned agree to your offer and then all you need do is make sure you stick to that agreement.

Step 3 (optional) – How to deal with debts you cannot pay

There will be times for some of you reading this when you are in such dire straights that any kind of repayment is impossible. At this point, you may find it beneficial to bring in an authorised third party to help your case. Some may simply offer you advice and help you with your financial statement. Others may go further and take your case over to negotiate repayments based on your circumstances.

Here are two of the most recognised debt advice centres where you can ask for help:

But there is a more complete list on this page at the Growing Power site. Do be cautious of companies who offer you debt management schemes. Some are fine, but there are others who charge fees to take your situation on-board and that obviously simply adds to your problems. As a rule, avoid dealing with anyone who asks you to pay for their help. The two organisations listed above are completely free of charge and are run by experts with a lot of experience in these matters.

Step 4 (optional) – What if you do not acknowledge the debt

If you do not recognise the debt as yours, or dispute the amount owed, you should write and ask for the debt to be verified. Request a copy of the original credit or loan agreement and an account of all previous transactions that relate to it.

Make sure you file a copy of your letter away somewhere safe for future reference, as no further recovery action should be taken until it has been proved that the debt itself is indeed yours.

A sizeable loan can make your stay at the university more bearable and fun. You’ll also be able to live more comfortably and enjoy financial freedom like never before.

But soon the debt creeps up on you, and you find yourself in such a financial mess that affects your finances for years. This is worth trying to avoid, especially if you don’t have a strong debt repayment plan.

Here are nine ways you can minimise your debt while at university and avoid this future financial burden:

1. Estimate university costs

Tuition fees form a significant part of university expenses. Not to mention the many other factors that you must consider as well, like books, housing, transportation, and meals. All of these need you to have a significant amount of cash.

An excellent way to dial down on taking possible loans for these expenses is by estimating the number of expenses that you may incur while studying. Then use this information to plan your finances early to determine the total out-of-pocket costs that you can manage and what to do with the balance.

Anticipating and preparing for university expenses puts you in a better position to minimise on loans that you take.

2. Limit living expenses

Campus life comes full of expenses that range from housing to meals and entertainment. It’s always tempting to want to eat out every night or live in an off-campus apartment. But you’ll need a lot of money to sustain this kind of lifestyle, which will ultimately drive you to seek out loans.

The best remedy for this is to be as frugal as possible and avoid any living expenses that may drive you into debt.

3. Consider other funding sources

You can also always opt for other funding sources besides loans to help with your living expenses. Applying for grants and scholarships are among the best alternatives to student loans that you can consider.

A college savings plan is another fantastic option to consider before going for a student loan. Where possible, you can also deduct your potential earnings from part-time jobs to use on your campus expenses.

4. Get a part-time job

Starting a side hustle is another brilliant way of minimising borrowing. Save a good portion of your earnings to help with your college expenses. There are also many online platforms such as fiverr that students can now use to earn an income and use the extra cash to supplement their tuition and other expenses.

Down the road, earnings from your side hustles can also help you pay off some of your loans.

5. Keep tabs on your borrowing

University isn’t a one-year enterprise. Student loans and other debts pile up along the way and can quickly get to a point where they are uncontrollable. It is, therefore, vital that you get a handle on your borrowing as early as possible.

The cumulative effect of what you borrow can overwhelm you when debtors start to collect.

6. Understand all payments

If you must borrow a loan, do so knowing that at some point, you will have to repay it. You should, therefore, make sure that you have read and understood all the terms tied to the loan, the deadline for repayment, interests accrued, and any additional fees and penalties.

7. Create a budget and stick to it

This is perhaps the simplest way of minimising student debt on campus. Creating a monthly budget and ensuring that you stick to it will help keep your expenses in check and prevent you from taking unnecessary loans.

Total up all your expenses and use this information to create a budget that you can stick to.

Here are some ways that you can trim your budget, so you minimise on the amount of loans that you take:

– Use campus resources
– Cut as many bills as you can
– Opt for affordable housing
– Reduce food and entertainment costs

8. Borrow only the amount you need

It’s critical to note that student loans aren’t free. You will eventually have to account for and repay every amount that you borrow plus any interests incurred. Therefore, the more you borrow, the longer it takes for you to pay off your debts.

Before you sign that dotted line, make sure that you’re only borrowing the amount that you need. This is good practice for reducing your loans, especially if you don’t need it.

9. Avoid using credit cards

Credit card loans come with very high-interest rates and fees. In most instances, they can even cost more than your student loan debt. It’s probably best to avoid adding a pricey credit card debt to your already troubling student loan debt.

Bottom line

Expensive lifestyles on campus make it almost impossible to dodge the bullet of student loans. But still, with proper planning, and smart moves, you can make sure that student loans and other debts don’t get the better of you. Be smart in your borrowing.

What should you do if you receive a debt collection letter?