The recession is playing havoc on the households today. People are losing jobs and the inflation is on the rise. There are just too many debts floating around the general population waiting to be cleared. The loans are from banks, credit cards etc. The amount of pressure on an individual or an institution is rising and so is the trend of Debt settlement industry. There are so many experienced and skilled players in the market and so many new jumps into the fray almost every day. The process of Debt Settlement might even drive somebody’s life, as money matters are one of the most sensitive issues which involve legal, mental and physical trouble all together.
Debt Settlement is one of the last resorts for a person in a fragile financial health, and has a huge burden of monthly payment as a way to repay the number of loans on his head. It is a more formal agreement between the creditor and debtor, in which both agree for a reduced amount of the balance of the outstanding amount of the loan money to be repaid.
The Process of Debt Settlement
The process involves a lot of negotiation skills on the individual’s part or the company, if he chooses to approach to do the Debt Settlement for him. The process could be categorised under the following steps:
- After going through the difficult process of selecting the right company to deal with the Debt Settlement issues for yourself, the first step would be to authorise the company to take steps on your behalf. The steps would include making phone calls, posting mails, meeting people concerned. The authorisation would place the company in direct contact with the creditors and would allow it to handle all the communication there on.
- Next, they would draw up a payment schedule for you, after taking into consideration all the financial data that you would make available for their reference. They might make suggestions to look up to alternate sources of money.
- If a person is significantly behind in the payment of loans, the creditors start to believe that the person would declare bankruptcy and thus no money will come their way. This would be the stage where the negotiations of the terms of Debt Settlement start. The company you enlisted with for help will keep the client posted with the latest news and development in terms of the progress with the creditors.
- The financial status of the debtor is reviewed and then the type of debt settlement is arrived at, with agreement with the creditor.
- The terms of the agreement of debt settlement are fixed and thus you can repay your loan off.
- Now that you are free from the financial and mental burden of loan, be careful before entering into another loan or EMI scheme that you may not actually require for your household.
- Try and avoid all the calls from the pesky creditors. Even if you would like to go for something, give it a thought before opting for one. You would not want to go in for another round of debt settlement anytime soon.