Do’s and Don'ts Of Debt Settlement
In a situation, when, as a debtor you are not able to pay the borrowed amount of money, the loan provider or the creditor may hire collection agency to get the money back. Collection agencies often follow rigorous procedure to get the money out from the debtor. When you reach that stage, it is best to get some advice on the options that are available for you. The advice can come in any form such as working on your financial budget, considering debt consolidation loan, seeking help from credit counselor, or debt settlement.
Debt Settlement advice is one of the most simple and effective options that provide a secure exit from unsecured debts. However, one should remember that it can leave a huge mark against your credit score. A debt settlement is often considered to be a viable solution for debtors suffering from heavy loads of debt. In this process people negotiate with creditors to make a full payment, which is less than the principal amount or create new payment plan with reduced interest rate. In general, debt settlement process takes place in case of unsecured debts such as medical bills, credit card bills, and so on. If you are considering debt settlement or debt elimination, here are some don'ts and do’s that you must keep in mind:
Do’s of Debt Settlement
Show Your Financial CardsIn order to gain creditor’s trust, you may even need to show documentations for income proof, assets and other existing loans or debts. They need to know whether your hardship is genuine or made up. So, be prepared with all the paperwork that can prove financial instability from your end.
Settle The Matter In The Right WayWhen you decide to pay debt settlement, make sure you find out that the creditor has reported the same to credit bureaus. Your creditor should communicate the settlement amount to credit bureaus so it can be reflected in your credit score. You definitely do not want to have a credit report stating that you owe full balance to the lender, even when you have paid the full settlement amount.
Don’ts Of Debt Settlement
Don’t Wait - Be ProactiveAs soon as you realize that you longer will be able to make the payment in time, take the necessary steps. Do not wait for your account to be charged off. A charged off account gives lender the power to reflect that the chances of repayment from that account is slim to none.
Contact your creditor as soon as you can. Nowadays, creditors have become very flexible. They are willing to talk about debt settlement if they know that your account is at loss risk. It has also been observed that when the debtor takes proactive steps, he/she may get even more options to manage financial obligations towards the creditor.If your situation has spun out of control, take a deep breath and contact Spartan Credit today. We will work with you and provide the best options to settle your debt. Our team has worked with creditors for years and have forged a relationship that is the standard in the industry.
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