Debt Is Not An Investment: Why Recovering Debt As Soon As Possible Is Important

Debt Is Not An Investment: Why Recovering Debt As Soon As Possible Is Important
Debt Is Not An Investment: Why Recovering Debt As Soon As Possible Is Important

One of the strangest excuses we’ve heard when talking to clients about why they loan out money to begin with is that they see giving loans as investments thanks either to interest or providence having the debtor pay them back just as they need the money. The thing is, unless you’re a bank, giving out loans and treating them as investments may not be a good idea. Here’s why you should get your money back as soon as possible:

Additional Expenses


Studies have shown that the longer before a debt gets paid, the chances of getting paid back without having to resort to a debt collection service are lower. The fact that you’ll have to resort to hiring a debt collection service will probably offset the profit you’ve turned from the interest. Collecting as soon as possible means you’ll make a bit from interest if ever, but you won’t have to worry about getting additional help.

Time Limits

Many states have laws that prevent debt collectors from being able to collect the debt if set amounts of time pass with no contact between the parties involved. This means that the longer you take to collect what your debtors owe, the more chances your debtor has to avoid you and eventually render the debt null. By getting paid as soon as possible, you keep the chances of getting what you’re owed certain.

Personal Gains and Losses


When you consider banks making profit off loans, one thing to remember is that when a bank gives out a loan, it usually takes these risks using other people’s money rather than their own. This reduces the risk to the company marginally. For you however, you’ll be investing your personal funds into the loan putting your personal finances at risk. This makes the risk involved in turning a profit from interest not worth it.

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