Everything You Need To Know About Loan/Debt Settlement

Loan settlement is also known as debt settlement, debt negotiation, or credit settlement. In this kind of settlement, the creditor agrees to a debt reduction, regarding it as a full and final settlement that the debtor gives to him. This approach to debt reduction works when the creditor and debtor come to a reduced balance settlement, which is considered as full payment.

Process Of A Loan/Debt Settlement

The loan settlement process consists of a negotiation with the creditors when borrowers must convince them to reduce the debt for a lump sum amount. This process is considered to be complete once the creditor agrees to this request and waives off a small percentage of the overall due amount for a lump sum payment. Moreover, only if you have taken an unsecured loan from a financial institution, will you be eligible for a loan settlement. If you have taken a secured loan such as an auto loan, a home loan, or a gold loan where you have given a commodity as a security, it will not be easy to negotiate a reduction in the debt amount.

In any case, it cannot be disputed that a loan settlement is a win-win for both the lender and the borrower. The borrower is saved from facing legal trouble due to payment defaults and gets a reduced amount to pay than what he/she borrowed. On the flip side, the lender draws out a sum quicker than he/she would without filing for bankruptcy, as this could also ruin the chances of the lender getting even a portion of the due amount from the borrower.

If you have defaulted on several EMIs or loan payments and have decided to choose a one-time loan settlement offer, the next step is to consider hiring a professional for the job or get it done yourself. In addition to that, if you decide to avail of the services of a debt settlement company to carry out the task for you, they would naturally charge a fee for their services. Hence, keep your budget in mind and ponder on whether you can set some money aside to hire a professional. You can also do it yourself if you think you would be a better negotiator than the debt settlement company.

Remember that you must run in the deep waters to get ahead of any difficult financial situation by negotiating with the lenders. You must make the bank or the financial institution understand your situation and why you have been defaulting on the EMIs. If the creditor rejects your request for a debt settlement, he/she might ruin his/her chances of recovering anything at all, in addition to added stress to you. Therefore, for instance, before placing a settlement request with your credit card company, cut down your credit card expenses 3-6 months before requesting the same to increase your chances of being considered for a one-time loan settlement by the creditor.

If you are interested in debt settlement, Register and talk to our counsellors.

Register Now