It is true that you can use debt settlement to get your outstanding loan amount reduced, but many people approach it the wrong way. The reason for this is lack of enough information about how the process is done as well as the requirements and possible outcomes. When your business is weighed down by debts, using debt settlement can be helpful, but you want to make sure you are doing it right.
With debt settlement, you get relief such as reduced interest rates on the loan, a reduction in the amount of the loan repayable or a postponement of the repayment date. Before you decide to go down this road and seek company debt help, the following are some of the facts about debt settlement that will get you prepared for the process.
Creditors won’t always grant your wish
To think that you will get a reduction in the amount of the loan you owe your creditors on a silver platter is a little premature. It is important to know that it is the creditor’s call and they may choose to say no. And before you think about how cruel that may be, it is important to think about the creditors relief and the need to protect their interest.
Before any creditor accepts your negotiations for a better credit repayment deal, you will have to prove that your current financial status makes it impossible for you to repay the loan as previously agreed. This will involve the scrutiny of your financials. Moreover, the manner in which you handle the negotiations will go a long way in helping you get a yes.
It’s not a favoured option by lenders
Another mistake that many borrowers make is thinking that debt consolidation is what the creditor prefers. This is not entirely true. There are other options for settling a debt that your creditor would prefer and so when you table your negotiations, be humble. The main reason that would make them consider using this method to get their money back would be your unstable financial situation. It will even be better if you have been paying your monthly repayments on time.
Debt settlement is not a right
While the government encourages debt settlement, it is necessary to note that it is not your right. Fact is, this is more of a proposal tabled before your creditor and the power to grant or deny lies with them. Another thing that would make your creditor accept to settle is when their financial status is weak and they need an immediate financial backup.
How to go about it
The way you choose to negotiate with your creditor has an impact on your success. The first thing to do is to have all your papers in place. These would include all your communication with the lender and the repayment records. Besides, it is recommended that you seek help from debt consolidation experts other than doing it yourself, especially when you don’t have the know-how. This might include the use of consolidation companies or consultants.
Having the information discussed above will prepare you for the settlement process and also help you know the possible outcomes.