Tips for a Successful Settlement Plan

People in debt have many questions and doubts about getting freedom from debt. Things get particularly difficult when incomes are affected, as is the case with COVID-19-related job losses or pay cuts. A settlement plan is a good way of getting relief from debt. This article explains how a debt settlement programs works and tips for a successful settlement plan.

How does a Debt Settlement Plan work?

When an individual defaults on loan, banks have various options to recover their money. They can file legal cases against the borrowers or request a travel ban on them. In the case of a mortgage loan, banks have the option of auctioning the mortgaged property to recover their loan amount. However, if banks are not hopeful of recovering the full amount du, they may be willing to settle for a lesser amount.

Tips for a Successful Debt Settlement

Here are some ways in which debt settlement programs can offer relief to borrowers.

Refinancing the Loan at a Lower Interest Rate

Banks can reorganize the loan at a lower interest rate, which will reduce the monthly outgo of the borrower. This arrangement makes the monthly installments less burdensome for borrowers. Also, borrowers can continue to own the property and can save their families from the hassle of displacement. They can also enjoy the benefits of any appreciation in property in the future.

Settle the Debt at a Lower Amount

At times, banks are willing for a debt settlement negotiation where they get a lower amount than what is originally due. An example of applying this approach is when the property’s market value is lower than the original amount due. The bank knows that even if they foreclose the property, they will still have to make a loss. In such cases, banks may agree to settle the debt at a lower amount.

Involve Professional Debt Negotiators

In case of financial difficulties, borrowers often face the risk of getting an unfavorable deal. For example, they may end up selling their property at much lower rates than market rates to clear off their debt. Many borrowers also are not aware of what is the best possible debt settlement program for them. For example, is refinancing a better option, or should they settle off the debt? Can they get a payment holiday for a few months and resume their installments once their financial situation improves? Professional debt negotiators can help borrowers choose the right debt settlement program for their needs.

Contact FREED for a Successful Settlement Plan

To conclude, involving professional debt negotiators increases the likelihood of a successful settlement plan.

FREED has an experienced team of mortgage debt counselors with 40+ years of management experience. FREED has helped hundreds of borrowers with successful debt settlement negotiations. If borrowers want to sell their property, FREED can also help them get the right price for their property.