How Debt Settlement Works
The Process
When customers fall behind with payments, this is called delinquency. The more delinquent an account becomes determines the creditor’s courses of action. Generally speaking, in the first 30 days there might not be more than a reminder letter sent, by the second month without payment there will be a letter and probably a phone call. If there’s still no payment by the time the debt has entered the third month, demands for payment become more urgent and can escalate into full-scale collection mode. The account may be transferred to an ‘in-house’ collections department if the creditor is large such as a bank or credit card company. The letters and calls now become more regular and more insistent.
If there is still no payment received, at some point the account becomes ‘charged off’ to bad debt, meaning the account is no longer considered an asset of the creditor. In effect it is a loss to the firm and is written off. Now payment in full of the entire debt rather than catching up on a few payments becomes the issue: the creditor is no longer interested in retaining a customer but in salvaging a financial loss. The in-house collections department may continue to work the account, but if efforts at recovery remain unsuccessful then the account will be assigned to a third party - a collection agency.
Some up-to-date accounts can be settled for less than what is owed, yes, but that is rare and the circumstances have to be extraordinary. Most settled accounts are those which have become delinquent. Most creditors will not consider a settlement until the account is at least three months past due and/or charged off and in the hands of a collection agency.
The arbitrator’s role in all this is to assemble all the facts of the debtor’s circumstances, to determine there is genuine need and that there are funds with which to settle. Presenting the creditors with a settlement is not dissimilar to a consumer proposal in bankruptcy in that there is a pro-rated amount available to each creditor. That amount is the most that the debtor can manage to pay to his creditors, there is no negotiation for more and the creditors understand that there is no other avenue available to them to recover more. It is then up to each creditor to either accept or refuse.
Successful arbitration should achieve more than just a satisfactory settlement of the debt. There should be a final letter from each creditor to the debtor confirming that the payment received was in full and final settlement of the debt. And each settlement payment is conditional on the creditor reporting the status of the debt to the credit bureau as both settled and with a zero balance.
K & G Debt & Credit Professionals care about your situation and want to help.
For more information on our Debt Settlement Program? Contact us today, see how we can
help you Eliminate Your Debt with our Debt Settlement Plan!
Debt Settlement Plans designed for Seniors
Seniors in Debt face unique challenges
The Debt Solution offers Settlement Plans specifically designed for the unique requirements of Canadian Seniors Debt
Canadian Debt Settlements by a Professional Certified Debt Arbitrator.
Through Debt Settlement I can:
- Stop collectors from calling you
- Negotiate your debt with your creditors down 50% to 80%
- Help you repair your credit report and inform you of your legal rights
- Lower your debt-to-income ratio faster than any other debt reduction option
- Help you Eliminate Your Debt by starting today
I step in to successfully negotiate debt settlements on your behalf.
Certified Debt Arbitrator
Brian
Pybus
