It is possible to run into debts in the business world but the manner in which the debts is handled greatly matters as it can affect the debtor’s reputation.
Payment of debts might prove difficult if the debtor is low on funds and unable to payback at once. This situation is quite tricky and can lead to a court case if not handled with care.
This is where debt settlement comes in. Both parties are able to come to an agreement that suits them.
Why resolve a debt?
Resolution of debt might be a very good option to go for as the debtor is able to come to an agreement with the creditor. Settling debts is quite different from paying off a debt and can prove to be both beneficial to the debtor and the creditor.
The two parties must come to an agreement and decide on how much the debtor must pay instead of the lump sum of the debt. The total amount agreed upon might not be up to the amount owed but the creditor is still able to gain a part of their funds rather than losing it all.
How to go about resolving debt?
Resolution of debts only occurs with debts that are not secured. Unsecured debts can pose a problem to the creditor as they do not know when they will be paid since there is no collateral.
Debtors that are unable to pay back debts because of lack of funds meet up with the creditor to form an agreement.
However, meeting up with the creditor personally might not be the best step as they risk getting a court case. Therefore, they hire the assistance of settlement companies that act as intermediaries between the two parties. These companies meet up with the creditor and form a deal with which the debtor has to comply with.
Debt settlements can be handled personally too if done professionally. It is best to make it clear to the creditor that you are down financially. If the creditor is able to confirm this, they might decide to go on with the settlement due to fear of losing the entire amount.
When paying up a debt via debt settlement, it is still possible to incur more debts if the deal is not followed. Failure to pay the agreed sum as at when due will increase the possibility of compiling the debt and even paying more than the initial debt due to addition of interests.
Even after hiring a debt settlement company to take care of debts, there is still a possibility that the creditor will not accept the offer and the debtor risks legal action. At other times, the creditor might note the settlement of debt on the debtor’s credit report, thereby damaging the credit score of the debtor. However, the option of debt settlement can be used without any negative impact on the debtor’s credit score. The debtor forms a deal with the creditor not to include the debt settlement on credit report. There are businessmen such as John Abio that offer their experiences in the business world to guide you in your business decisions.