By: Q. Cuarana, MBA
Creditors may allow for debt relief as a way to recover some of the debt owed by a borrower. Debt relief is a process where a borrower and creditor agree to a reduced payoff amount to resolve the outstanding debt. Debt relief is typically negotiated by attorneys in bulk through IAPDA accredited firms such as Debt Busters.
Debt relief can be beneficial for the borrower in reducing the amount of debt, the term of the debt, and the interest accrued. But it can also be beneficial to the creditors. This can be beneficial for creditors for several reasons:
- Increased chances of recovery: When a borrower is unable to make payments on their debt, the creditor may have limited options for recovery. By allowing for debt relief, the creditor is more likely to recover a portion of the debt, rather than receiving nothing in the case of a default.
- Faster resolution: Debt relief allows for a quicker resolution to the debt compared to other collection methods, such as wage garnishment or a court judgment. This saves the creditor time and resources that would otherwise be spent on collection efforts.
- Reduced legal costs: Pursuing legal action to collect debt can be costly for creditors. By allowing for debt relief, creditors can avoid the legal costs associated with pursuing a judgment in court.
- Improved reputation: Creditors who are seen as being willing to work with borrowers to find a resolution to their debt can improve their reputation and potentially attract more business in the future.
Overall, debt relief can provide benefits to creditors by allowing them to recover some of the debt owed, resolve the debt more quickly, reduce legal costs, and improve their reputation. It is important to note that debt relief is not always an option for every borrower or every type of debt and that it may cause a temporary clip for the borrower’s credit score, but should improve over time.
Debt relief typically reduces the amount of the debt owed by the borrower 30-50% and reduces the terms of payments from 12-15 years down to 2-5 years. Click here to see if debt relief is something you may be eligible for.
Carlo V. DeFalco
RELENTLESS Venture Studio