what are the consequences of negotiation of lower debt payment
By kingparker
@kingparker (9673)
United States
July 13, 2011 8:41pm CST
So, I understood many people might facing difficulty right now or while ago. Some people would be under extreme situation and is unable to pay a certain debt after careful calculation. They usually seek debt management plan, or some financial institution might also offer hardship payment program, let the borrowers to pay 50 cents per dollar, or even lower than that. So, what are bad effects if someone want to negotiate down the debt payments? I heard that those percentage of debts financial institution agree to write off will be taxed at the end of year, is that a truth? Also, it will definitely affect your credit scores in the near future, etc...... Besides these, what other effects will be on you if you attempt to negotiate a lower payment. Advise, if you think you can handle the payment, do not try to negotiate it, trying to pay it off 100% as you can. Otherwise, it will harm you score. What do you think?
1 response
@CelticSoulSister (1640)
• Southend-On-Sea, England
14 Jul 11
The laws and practices in the USA might be different to what they are here in the UK, but I do have a debt management plan. The main advantage is that it's helped me considerably reduce my monthly repayments to a manageable level (long story as to how the debts built up), but the main disadvantage is that this debt management plan will continue until I'm aged in my mid-70s! I'm not looking forward to getting old and still having to pay this monthly instalment. Another disadvantage is that I'm constantly being bombarded by a particular UK bank who are owed the money, yet it's partly due to their lack of flexibility that my debt level rose as high as it is - they flatly refuse to accept that, yet still keep the interest compounding on my debt. At this rate, it'll never be repaid.
As for the debt management plan affecting my credit rating, which it has done, that isn't a problem for me personally as I have no need for credit now in my life, but it could spell disaster for other people.
