Debt Relief – How Important Is the Repayment Schedule in a Settlement …

Once a debtor contacts creditors for a debt settlement, no payments are to be made until the negotiation is completed and a settlement amount is decided. It is usually better to pay off the settlement amount as a lump sum as it saves you interest. At the same time if you agree to pay a lump, you are likely to get a better deal during the negotiations. Sometimes when you hire a specialized debt settlement company, you have to pay them a fixed amount every month. The payments to the creditors are stopped till the required amount accrues in the bank account. When the required amount is collected the creditors are one by one paid a lump sum equal to the settlement amounts decided during negotiations.

Sometimes debtors are not in a situation to pay a lump sum and may convince the creditors to pay a fixed amount every month. In this case the rate of interest on the amount payable can also be negotiated and reduced. One thing should however be kept in mind is that whether you have agreed to pay the debt settlement companies or the creditors a fixed amount every month it is very important to stick together strictly to the payment schedule and make the payments on time every month. If your agreement is with the creditors directly then non payment of already one installment after settlement can land you in litigation with the creditors. Not only this the creditors may request the court for the garnishing of your wages.

If however you have hired a settlement company already then the payment schedule is very important because if you miss already one installment, it will upset the already precarious balance and the payment to the creditors will be delayed. As a consequence the creditors may decide to get out of the settlement agreement and need the payment of the original amount payable. They might already drag you to court and need a garnishing of your wages. Hence you should never become complacent about the payment schedule once the debt settlement has been made. In fact payment on time is of utmost importance in the case of a debt settlement agreement.

Leave a Reply