subject: The Stages of Debt Settlement Negotiation [print this page] The Stages of Debt Settlement Negotiation
Most of the debt settlement companies exist primarily online, and they'll expect interested customers to fill out the application documents over the internet before they sit down to talk on the phone with one of the settlement counselors. Since not every applicant for settlement negotiation will qualify for the program, this initial round of debt analysis could prove crucial in weeding out the most favorable clients from those with poor debt to income ratios that haven't a chance at a decent negotiation. The debt settlement counselors will examine all aspects of your household finances to see precisely how much money you would be able to send the creditors each month. From that assessment as well as the final settlement figures reducing the credit card debt balances the settlement professionals should be able to quickly estimate how many months it would take to pay off the entirety of your unsecured debt accounts.
Under normal circumstances, the settlement company wouldn't want to take on the case of any borrower whose income is so low or accumulated debts are so high that a complete elimination of unwanted financial burdens would require more than sixty months. Negotiation with creditors becomes substantially more difficult once the proposed period of repayment passes five years. As follows, the best settlement companies are in such high demand these days that they would simply rather turn down clients that present potential problems so that they could concentrate efforts on the ones with more sparkling financial prospects.
Not all debts can be settled, of course. Any debts secured by property that could be retrieved through repossession or foreclosure auto loans and home mortgages are the most common won't be a part of this process. There's no need for creditors specializing in secured loans to bother with settlement since seizure of the assets in question will potentially be more profitable than even complete restitution of the money originally borrowed. Settlement negotiation only really applies to the unsecured debts which most of us end up carrying. Defaulted bank accounts, debts resulting from medical services or hospitalization, and, of course, store charge cards and credit card accounts. The exceptions to the unsecured rule are financial burdens which couldn't be eliminated through a declaration of Chapter 7 bankruptcy protection: student loans, tax debts, and unpaid financial obligations assessed by the government like alimony or child support.
Just because one of the applicable loans has been charged off by the creditors so that their company could receive the corporate tax benefits from an unrecoverable debt, you shouldn't assume that settlement negotiation would not be of interest to the lender. If anything, lenders who've gone ahead and charged off a loan would be more than willing to surrender some portion of what was once owed in return for the pledge of some monetary compensation to come. After all, there are considerable costs attached to involving lawyers or collection agencies, and many creditors believe such actions to be simply throwing good money after bad.
After the debt settlement company and the lenders come to terms upon the amounts that shall be paid, you'll begin sending a predetermined sum each month to the settlement company who'll deposit the money into a trust account. The creditors will then be paid in full from the settlement account at the end of the process. Once the creditors take possession of the funds, you'll no longer have any legal responsibility for the former debts. Still, that's not quite the end of the settlement negotiation experience. You'll still have to likely get the counselors to remind the creditors to mail copies of the settlement agreement to the credit reporting agencies alongside some notes of satisfactory payment. Only after the agreement has been recorded in the three credit bureaus' reports will the settlement truly be finished.
