Should I take a settlement offer offered by my creditor?
It’s not uncommon that when you are behind in payments and your bill has been turned over to a collection agency, you will be offered a settlement. This offer can be considered an informal settlement.
First, it is important to understand the terms of the settlement – typically, settlements require a lump sum payment immediately. If you’re already having trouble making payments, the lump sum payment will be difficult to manage. If you do accept a settlement offer, it is essential to get the settlement in writing; you could be asked to pay the balance of the amount owing even after paying the settlement. If you don’t have a signed and written agreement stipulating the terms of the settlement, you won’t have proof that you have settled your debt.
With this in mind, the most important thing to consider when you’re contemplating a settlement is to look at the full picture of your financial affairs. Will, this one settlement make your debt manageable? For clarity, manageable means that you’ll be able to afford the monthly payments needed to pay off your debt. Sometimes, it can be overwhelming to look at the full picture but it’s important to determine whether the settlement will resolve your debt issues not with just one creditor, but all of your creditors.
There are other debt-relief options that can address this problem, such as consumer proposals. It’s also important to do the necessary budgeting to make sure a settlement will make your debt manageable. During your free consultation with us, we will ensure that making a settlement will resolve your financial difficulties and not just delay them.