The Three Keys To Debt Settlement | Terms You NEED To Have In Your Debt Settlement Agreement | Summary and Q&A

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September 13, 2022
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Consumer Warrior
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The Three Keys To Debt Settlement | Terms You NEED To Have In Your Debt Settlement Agreement

TL;DR

Learn about three crucial terms that should be included in any debt settlement agreement to avoid future problems.

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Questions & Answers

Q: Why is it important to get a debt settlement agreement in writing?

Getting the settlement agreement in writing ensures that there is a written record of the agreement, protecting you from debt collectors denying the existence of any agreement in the future. It can be as simple as an email or a formal contract.

Q: Why should you insist on no interest in a settlement agreement?

Without insisting on no interest, creditors may continue to calculate and charge interest on the remaining balance, even if you're making monthly payments. This can result in owing more than what you initially settled for, wasting time and money.

Q: What is the significance of a grace period in a settlement agreement?

A grace period allows for some flexibility in payment deadlines. If you miss a payment by a day or two, or if the payment falls on a weekend or holiday, you won't be considered in default and won't face additional collection activities, such as lawsuits or wage garnishment.

Q: Can settlement agreements be used to resolve any type of debt?

Yes, settlement agreements can be used for various types of debt, including collection accounts and debt collection lawsuits. It is an alternative to going through lengthy litigation and can help you pay off your debt for a lower amount.

Summary & Key Takeaways

  • Debt settlement is a viable option to pay off debt for less than what is owed and avoid lengthy litigation.

  • Three important terms to include in a settlement agreement are getting it in writing, insisting on no interest, and having a grace period for late payments.

  • These terms ensure that the agreement is legally binding, stops interest from accruing, and allows for some flexibility in payment deadlines.

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