The Statutes of Limitations and debt collection companies

Let’s take a look how the Statute of Limitations relates to debt mediation.

The Statute of Limitations is a passage for law that limits the time that a creditor has to recover a debt.  In most cases for what is known as a “simple contract” which covers debts such as credit cards and personal loans, this is six years.

This six-year period commences from the time an account becomes overdue.  This six-year term will restart if a borrower makes a payment towards the debt or acknowledges the debt in writing.  Short of this, if a debt is not recovered within this timeframe then the credit provider may lose their ability to recover the debt.  There are some exceptions to this which I will cover in a later article.

What is interesting is even if the borrower talks with the credit provider or debt collection company, this may not in itself constitute acknowledgment.  […]

Loan shortfalls can be a good thing.

For many people refinancing can be a great option to provide additional funds to consolidate their debts and reduce their overheads. With debts such as credit cards attracting high interest rates, it can save people significant amounts of money to replace such debts with a single loan with a lower interest rate.

When applying for a new loan there are a number of factors that dictate that persons borrowing capacity such as what they earn, the status of their credit file, and the value of their property.

This leads to situations where the amount they are able to borrow falls short of what is required to payout all the debts they were hoping or needing to consolidate. The good news is there are situations were creditors will agree to reduce what they are owed in order to allow a refinance to take place.

The big five for debt mediation

While every client’s situation is different there are a number of things that remain the same with debt mediation, they are:

The credit provider wants their money
Despite why they say, a credit provider knows that commencing recovery or legal action or threating a borrower may not get them any closer to getting paid. In many cases pushing too hard can actually reduce their odds as the borrower might withdraw and break off communication. Given this, the credit provider will seriously consider a responsible offerto settle the matter quickly.

Old debt is good
The longer a credit provider or debt collector has been trying to recover the money the more likely they will be to consider a reduction on the debt. In these cases, credit providers and collection companies are very happy to hear from someone in relation to the resolution of the account. In the right situation, older debts […]

Will creditors really agree to reduce debts?

It is common for people not to realize that many debts can be reduced provided the credit provider in question is handled the right way.

In the case of a debt collection companies many debts they hold can be quite old.  In fact, the older the debt the less they typically will pay to acquire it, in some cases these debts are being purchased by debt collection companies for as little as 20 cents in the dollar, sometimes less.

It is true that in many situations the credit provider or debt collection company is as eager as the borrower to resolve the matter, this is especially true for unsecured debts such as credit cards and personal loans.  In such cases the credit provider has limited means to recover outstanding funds.  Other than commencing recovery or legal action, there is little they can do other than put as much pressure on the […]