A Guide to Debt Settlement
What is Debt Settlement?
Debt Settlement is a legal process within which individual debtors are granted the opportunity to relieve, adjust, or restructure their respective debt through the undertaking of various measures, efforts, and methodologies available through a variety of means; within the realm of Debt Settlement, an agreement to arrive on an acceptable settlement on behalf of both the debtor, as well as on behalf of the institution in ownership of the defaulted loan, which spawned the debt in question can be achieved with regard to a variety of ways. However, amongst the most common types of Debt Settlement takes place through negotiation between the financial institution in ownership of the outstanding debt and the respective debtor.
Important Terms Associated with Debt Settlement Plans
The following classifications outline the most primary categories of individuals involved within Debt Settlement measures; you are always encouraged to consult with legal or financial counsel prior to undertaking or agreeing to any Debt Settlement plan:
The debtor is defined as the individual entity – ranging from private citizen to commercial endeavor – who has incurred debt through the inability or failure to repay an outstanding loan furnished by a lender or lending institution; with regard to Debt Settlement, the debtor will be responsible for agreeing to the adjusted terms of debt repayment through Debt Settlement
A lending institution, may be defined as the original entity owed repayment concerning the debt or debts in question; not only the origin of the debt in question, but also the formulation of the terms and conditions concerning the furnishing of the loan to the debtor took place through this institution; while the lending institution may undertake the furnishing of a Debt Settlement, it is not uncommon for a lending institution to sell outstanding debts to collection agencies
Collection agencies range from independent to Federal agencies that specialize in the undertaking of retrieving payment concerning outstanding debts, defaulted loans, or repayment requirements; a collection agency will typically purchase outstanding debt from lending institutions for reduced prices – once purchased, these agencies formulate and develop Debt Settlement plans in order to render profit, repayment, or both
Types of Debt Settlement through Repayment
The following types of Debt Settlement plans undertake scheduled repayment plans:
A Standard Debt Settlement program provides for a standardized payment required for furnishing on a monthly basis on behalf of the individual debtor concerning the lending institution
An Extended Debt Settlement allows for an extension of the repayment period concerning the life of the loan itself the time of the loan, which typically results in the lessening of the required, scheduled repayment amount
A Graduated Debt Settlement provides for a variable repayment amount with regard to life of a defaulted loan
A Prorated Debt Settlement allows for debtors wages, earning, and income to serve as a determinant factor with regard to the establishment of repayment amounts
A Lump sum Debt Settlement plan allows the debtor to furnish a reduced amount for repayment in lieu of the full amount owed; however, this type of Debt Settlement plan may require the debtor to furnish the adjust – albeit decreased rate – all at once