It is a useful strategy to agree that your creditors accept a combination of reduced lump sum payments and debt consolidation loans. By doing this, you can reduce the total amount you need to lend, while reducing the total monthly payments. This will allow you to truly get back on track economically and reduce your commitment to scale.
Although you may think that those companies you owe money are pitifully low, most people are willing to agree. The number of bad debts is very high, and the amount recovered in history may be much lower than the 10 cents of the dollar. Therefore, if you can prove that you cannot pay the full amount but are willing to pay a reasonable percentage, they agree that the pressure is great.
Another major motivation is to avoid expensive legal fees. Everyone knows that going to court may be an expensive business, and the amount of money is not worth it. Banks and credit card companies may have to write the amount, so any reasonable amount they can recover looks good.
Another important factor is that by reaching an agreement with you for a certain amount, your creditors will get better deals than long-term court proceedings. Experienced lenders are usually satisfied with a bird in their hands. There is really no harm in trying to negotiate better deals, especially if you can prove to creditors that they are illegally waiting to get better deals.
If you cannot pay monthly, your credit history is poor. Since this is a big negative factor, you need to clear your records. One way to do this is to use it as a condition of any settlement agreement so that the lender will remove bad credit details from your records. Then you will be able to start again with a clean slate.
In any case, debt consolidation loans have positive advantages for anyone who owes money. You end up worrying only about a debt, and you can usually negotiate a lower interest rate than your current debt while extending the repayment period to make the payment affordable. Even if you do not succeed in reducing your debt amount, it is very distressing to only deal with one creditor and have a more affordable payment.
Orignal From: Why creditors agree to debt liquidation
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