Several factors may influence this amount, such as the debt holder’s financial situation and available cash on hand. Lenders typically agree to a debt settlement of between 30% and 80%. Since most loans involved in debt settlements are unsecured - meaning there is no property to seize in place of repayment defaulting - the creditor is often better off accepting part payment, as opposed to getting nothing at all. Another reason is that they, too, could be in need of cash at the moment. What Percentage Should I Ask a Creditor To Settle for After a Judgment?įirst of all, you should know that a lender is more likely to agree to a debt settlement agreement if they view the debt as likely to be written off. Let’s consider what percentage should be paid during a settlement and how it all works. However, it’s not always this clear-cut, as different loan structures require different approaches to debt settlement. In return for a one-time payment, the credit card company may agree to this, thereby forgiving the remainder of the credit card debt, which is $5,000. With the concept of debt settlement, he may approach his credit card company, offering to pay $10,000, which is probably a more comfortable amount for him to handle. Take, for instance, Mr A, who owes $15,000 on a credit card and may be finding it financially challenging to repay this balance. One question remains, though: What percentage of a debt is typically accepted in such a settlement?
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Most times, creditors realize that full payment for a debt might not be possible, so they opt for debt settlement. Debt settlement is an agreement between two parties - one a borrower and the other a lender - for a one-time payment to cancel out the remaining debt balance.
For the borrower, a debt they can’t pay up is often a financial nightmare, accompanied by unhealthy amounts of anxiety. Unsettled debts pose a problem for everyone involved.
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