In debt settlement, borrowers and lenders attempt to resolve an outstanding debt. In most instances, the two sides put together an agreement that details how the settlement will occur. For example, an agreement may create a payment plan in consideration of the borrower’s income or other circumstances. The agreement may also set forth whether parties can sue, or if a lender can seize the borrower’s assets in lieu of payment.
How Debt Settlement Is Accomplished
Before the sides can reach a debt settlement agreement, they must resolve their differences. The sides can reach a resolution through private negotiations, court-ordered mediation or legal action. Using these methods of dispute resolution, parties may submit the final terms to the court for approval. When the agreement is approved, the court can help each side enforce its terms.
Debt Settlement Legal Issues
The main issue in many debt disputes is a contract breach. Lending is typically done by contract, and debts arise when the contract is breached, for example, if a borrower fails to make timely mortgage payments, they are in violation of the contract. Third-party rights are another common issue; some settlements are done when another party pays the borrower’s debts. Another contract outlining intervention terms may be necessary, and if none exists, the original agreement may be violated.
Debt Settlement Dispute Outcomes
A debt settlement usually results in damages being given to the lender; however, in some cases the borrower may not be able to pay. In these instances, the court may issue a lien that allows the lender to seize the borrower’s property in an amount equal to the debt. A common example is in a bank foreclosure, where the bank repossesses the borrower’s home if they don’t make mortgage payments. Debt settlement often results in major financial upheaval for the borrower, and most disputes require the assistance of a debt settlement attorney.
Consult an Attorney for Debt Settlement Help
Every jurisdiction has different laws, and some rules may be stricter than others are. If one heeds debt settlement help, they should consider hiring a debt settlement attorney. A local debt settlement lawyer with Stlbankruptcyfirm.com can help clients with their claims, and they can represent a borrower in the event of a lawsuit.
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