The Basics of Debt Settlement Plans for Bank Loans

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Bank loans may be overwhelming especially that you will be charged with higher interest rates. As a result, your total payable will exceed your loanable amount. Many have actually been banned from loaning with banks since most of them can no longer pay their outstanding balance, making them suffer from accumulated huge debts. That is why many debt-settlement companies have emerged to offer relief to borrowers thru the use of Debt Settlement Plans.

Debt-settlement plans basically involve a proper negotiation with your creditors so that you will only pay a lesser amount than the actual value you owe. The negotiated amount can be paid thru one time or installment basis depending on the agreement between your creditors and debt-settlement companies.

In most cases, a debtor who suffers from bankruptcy, illness, job loss, or injury is no longer eligible to pay debts and might request for some time off before continuing repayments. However, not all debts are eligible for settlement. Based on a rule of thumb, only those unsecured debts are permitted for debt settlements thus, we will be providing you a guideline to be aware as to which loans are qualified or not.

Debt Settlement Plans with Banks

Debts eligible for debt settlement:

  • Unsecured personal debts
  • Credit cards
  • Medical obligations
  • Gas station or retail store card
  • Student loans
  • Communication and utility bills from a closed account
  • Mortgage short payoffs
  • Outstanding rent payments from previous residences

Debts not eligible for debt settlement:

  • Current rent payments
  • HELOC or Home Equity Lines of Credit
  • Criminal penalties
  • Second to third mortgages
  • Back taxes and debts from gambling
  • Communication and utility bills from an open account
  • Rent to own deals
  • Child support ordered by the court

Debt Settlement Plans with Banks

How to get a Debt Settlement Plan

Debtors who are seeking information on how to properly secure a debt settlement plan will most likely be battered with notifications from third-party or debt settlement agencies. That is why it is important to have vast knowledge on how to choose the best partner for processing debt relief.

Firstly, your lawyer or a debt settlement company will ask you to make deposits of a certain amount into a savings account that will be further used to pay the negotiated amount. Although it sounds easy, processing debt settlements actually take a longer period of time around three to four years. So in the meantime, your lawyer will negotiate with your bank to lessen the overall repayment amount, i.e., you will only pay a one-time huge portion of the total outstanding balance and then the remaining loan balance will be forgiven. Thus, your lawyer will recommend you to stop paying your monthly obligations since creditors will not approve debt settlement negotiations from those who are still able to pay their debts.

However, all these processes are of course, not free. It might be a little pricey which is why it is a must to choose the right partner as it could take up to four years before you can totally settle your bank loans. So if you are currently residing in Israel, Adv. Maor Levi can be considered as the best professional who can surely help you with your הסדר חוב מול הבנק.