Negotiations with Creditors Attorney in Howell, New Jersey
Serving Residents of Jackson Township & the Surrounding Areas
For some people and businesses, bankruptcy is the answer. For others, it is not. There are many circumstances in which the filing of a bankruptcy case may not be the best option. For example, you may have assets that will be at risk if you file for bankruptcy or you may have too much equity in your home. You may have certain debt that will not be discharged in bankruptcy or you may simply not qualify for bankruptcy relief. In those instances, a better option may be to negotiate with your creditors.
Can I Negotiate with My Creditors?
You can usually negotiate with your creditors. Depending on your circumstances, whether directly or through an attorney, negotiating to settle your outstanding obligations for less than the full amount due is an option that most people can take. Through this process, you may be able to change the terms from the original agreement with the creditor, to terms that are more workable for you.
Some creditors are willing to accept a lesser amount if you are able to make a lump-sum payment in the near future. Some creditors are willing to accept as little as 40% - 50% of your original debt. Others may be willing to reduce the amount of the monthly payment or to reduce the interest rate – either permanently or temporarily. The longer that your account has been in default, the more likely the creditor is to settle with you – and for a lesser sum.
There is nothing that requires a creditor to work with you. However, many creditors understand that entertaining settlement offers and making your repayment terms more manageable for you, increases their chances of receiving payment. For this reason, creditors are often willing to work with you.
What Is a Loan Workout?
A loan workout is when you, the borrower, restructure an already existing loan agreement. This is an alternative to filing bankruptcy. When you default on a loan, usually by falling behind on payments, you can reach out to the lender to try to work things out, so that the lender does not take any collection action against you.
You ordinarily begin by explaining the circumstances that caused the default and then proposing a reasonable plan to put the loan back in good standing. Sometimes the terms of loan are changed, either temporarily or permanently; other times past due amounts might be put on the “back end” of the loan.
Under any loan workout scenario, you must gain the consent of the lender. Often the parties will engage in quite a bit of discussion, negotiation, and exchange of documents, prior to a settlement being reached. Even if your attempt at a loan workout is not successful, there are usually no negative consequences for trying.