We are often asked what happens if there are a number of credit providers involved in a reduction.
The best way to can answer this is by giving an example of a recent matter we were involved with.
This particular client had arranged a refinance to consolidate his debts. Unfortunately after reviewing the amount secured it was not sufficient to retire all the unsecured creditors along with the current mortgagee. As many of these facilities were behind the incoming mortgagee had insisted that all the clients debts were retired from the loan proceeds, this made sense and gave the client a fresh start.
This client had sixteen unsecured debts such as credit cards and personal loans; they were all in arrears so this refinance was very important.
Upon reviewing the situation we could see that there was a shortfall of just over $40,000.00 between the loan approval and the total amount required to clear all the creditors.
It can be very difficult to approach one or two credit providers to discount a debt when there are others involved as understandably their attitude is often “why should I reduce our payout figure when others aren’t”
Given this I find the best option is to approach all the unsecured creditors to discount the amount owed by a similar percentage. To do this you must first know what the shortfall actually is. Keep in mind that the accounts could be increasing daily, especially if they are in arrears so it is important to add a buffer to accommodate for this. Once this figure is set, you will know the percentage of the discount required. This percentage can then be applied to each account. Given all the credit providers approve, the settle for less offer can proceed to settlement.
It can be very complex and time consuming dealing with multiple credit providers, however this approach often yields positive results when compared to expecting one or two credit providers to take the majority of the burden.
In the example quoted earlier, Clean Credit Debt Resolutions was able to arrange a settle for less offer from all sixteen creditors and we saved our client over $40,000.00 in the process.
If an account such as a credit card or personal loan is in arrears and the creditor is presented with a viable option to release themselves from the account they often will, even if its means receiving less than the full amount owed.