Understanding the Importance of Debt Settlement Letters & Other Written Documents

The spiraling debts are adversely affecting numerous entrepreneurs today worldwide. Businesses are failing simply because of a financial crisis. Statistics reveal that in 2017, the total revolving debt of the Americans was more than $1 trillion as per Forbes. In 2018 total consumer debt is all set to reach as much as $4 trillion as per a Federal Reserve data analysis. Moreover, Wall Street investors are worried about the fact that the U.S. corporations have touched a record $6.3 trillion in terms of debt load according to S&P Global. The investors need to tackle stricter rate environment while cash hoarding seems to be at its pinnacle. Fortunately, the U.S. companies today, have $2.1 trillion cash for servicing that debt as per cnbc.

For all those entrepreneurs with overpowering debts and absolutely no way of paying them off, they must consider debt settlement. We know that debt settlement generally necessitates a third party. Debt settlement implies that a creditor has actually agreed to accept a lump-sum that is definitely less than the actual amount owed by you, as full payment. Moreover, debt settlement also means collectors would no longer embarrass you or hound you wherever you go for the money. You are now relaxed as there are no chances of you getting sued over your debt.

Getting Debt Settlement Agreements & Letters

Negotiating debts could be a great move but it certainly does not actually close the deal. Negotiating your debt and then paying as per the new agreement would necessitate a settlement letter. In this tricky world of debt purchasing, credit, reporting, and debt collectors, it would be a grave mistake to settle your debts and pay off the lump-sum without any written documentation and evidence.

A Verbal Agreement Does Not Suffice

When negotiations are being made with your creditors more often than not, most settlements would at first, be reached verbally. However, the verbal agreement would be regarding the lump-sum money that needs to be paid to the creditor as a one-time payment or to be paid in multiple installments over an agreed period of time, until debt settlement is reached. It is critical for you to understand that the debt settlement deal is incomplete unless the process is fully-documented and completely funded, as per the payment timelines and terms mentioned in your debt settlement letter.

In this context, you must know that verbal communication between a debt settlement company and your creditors or debt collectors is an integral element of your debt negotiation process. As an entrepreneur in distress, you could yourself carry on communicating with the debt collectors or your creditors until you have been able to arrange the cash for settling your debts. You must accumulate enough funds before seeking the services of a trustworthy debt settlement company.

You must have the targeted amount for funding the agreement and settling the debts. It is absolutely unnecessary to get in touch with your creditors for debt settlement if you do not have the adequate funds to settle your business debt. Do not start the debt settlement process unless you have the funds readily available. There is no point in beginning the negotiation process without arranging the money as it would mean sheer wastage of time for all parties concerned. Examine the debt settlement ratings before consulting the services of a debt settlement company. The targeted settlement amounts would be differing from one account to another. In case, you are working with a professional, you would be able to determine a really realistic settlement percentage and goals utilizing real-time data regarding the debt collectors and your creditors involved in this entire deal.

Consider Reviewing Carefully Your Debt Settlement Letters

Reaching a debt settlement would be taking just a single phone call or it may necessitate a number of calls extending over days or weeks or even a few months. Once the agreement is reached and the debt settlement deal is done, you must never forget that no deal is complete until it is effectively documented. Once you find that everything is written clearly, you could give the green signal to the debt settlement company that the necessary funds are ready. In this context, you must understand that debt settlement letters and agreements with original debt collectors and creditors are supposed to be a standard form comprising the following elements or segments.

  • The Debt Collector or the Creditor’s Name.
  • The Date the Letter was Issued or Drafted.
  • Your Name.
  • Your outstanding balance.
  • Your Account Number.
  • The Precise amount that has been agreed for settlement and debt satisfaction.
  • Amounts and terms of the payments. Whether a one-time lump-sum or a few installments over a certain period of time.
  • The precise date when you must make the payment for settling your account.
  • The debt settlement letter must clearly state that the account has been settled or paid in full.

Moreover, the debt settlement letter would be containing some other important general information like debt settlement disclosures. Collectors and creditors include this specific information for covering themselves. All the bulleted points are the elements that must be included in the debt settlement letter to have you covered.

Debt settlement using any third-party debt collector implies that you need to necessarily get all details documented. Only then, you could go ahead with all the payments as per the agreement. If any of the given bulleted points seem to be absent in your debt settlement letter, make it a point to insist on getting a fresh letter that includes all the above-mentioned specifications.

Conclusion

Once both the creditors and negotiators arrived at a verbal agreement, all the details must be included in a written document. So a debt settlement letter must be sent to you. Make sure that the letter has met all the requirements and only then start remitting payments in full or in installments as per the agreement details. In case, you do not get a debt settlement letter that contains all the standard information for protecting you, you may consider walking away from this deal. You may get the settlement letter via email or fax. You must safely keep your settlement letter along with your other important documents so that you could find it whenever you need to.

Author Bio

Kelly Wilson is an experienced and skilled Business Consultant and Financial advisor in the USA.  She helps clients both personal and professional in long-term wealth building plans. During her spare time, she loves to write on Business, Finance, Marketing, Social Media. She loves to share her knowledge and Experts tips with her readers.

SD Asia Desk

Contact

Posts

1606