What Can Be Negotiated With A Consumer Proposal Edmonton?
If you are having trouble paying off all of your creditors and lenders, a consumer proposal Edmonton may be one of your best options for getting out of debt. This type of debt solution consists of negotiating the terms of your debt. You, a credit counselor or bankruptcy trustee, can negotiate the terms to hopefully come up with a payment plan or option that you can afford to pay. Here are some of the different things that can be negotiated with a consumer proposal Edmonton.
The Amount of Principal Owed:
The amount of principal that is owed is the most commonly negotiated item when it comes to a consumer proposal Edmonton. This is because you have a better chance of getting out of debt if the bank or lender agrees to cut the amount of money you owe. Traditionally, creditors and lenders have wanted an upfront settlement agreement to cut debt. For example, if you owe $10,000, they would want you to pay $5000 right away and then they would settle the debt and close your account. However, as more and more people find themselves having trouble paying their bills, creditors and lenders are willing to negotiate. They may cut your principal and still allow you to make payments. However, if you can make a lump sum settlement, you will still get a better principal reduction than if you needed to make payments.
The Interest Rate:
Having a high interest rate causes most of your payment to go to interest, rather than principal. This can make it extremely difficult to get out of debt. If you find yourself making your payments but not seeing the amount you owe go down, you may want to try to negotiate the interest rate. Some lenders will agree to lower your interest rate for a short period of time, such as 6 to 12 months, whereas others will slash it and leave it there as long as you continue making your payments on time.
The Monthly Minimum Payment:
This negotiation tactic should be used only when creditors and lenders are unwilling to budge on your principal or interest rate. This is basically refinancing your loan, dragging your payments out longer, just without jumping through the hoops of applying for a new loan. When a bank or creditor refuses to lower your principal or interest rate, you can ask about reducing your minimum monthly payment. This may be the only way you are able to afford all of your payments. Unfortunately, since they aren't reducing your principal, you still owe the full amount and you will make payments for longer than was originally planned. However, this may be a better choice for some people than failing to make payments or having to file for bankruptcy.
Any Late, Over-the-Limit or Annual Fees:
Credit card fees can add up, especially if you are struggling to stay afloat. Some of these fees can eat up your entire payment, meaning you are paying nothing towards principal and will never get out of debt. If you are struggling to pay down your bills because of these fees, call the credit card company and ask them to stop charging you so that you can pay your debt down. If the company's options are to either work with you or have you file bankruptcy and them not see a dime, most will work with you.
How the Debt is Reflected on Your Credit Report:
The last thing that you will want to negotiate when drawing up a consumer proposal Edmonton is how the debt is reflected on your credit report. The creditor can mark your account paid in full, paid on time or settled. A settled account will reflect negatively on your score, so when possible, you want to negotiate that the account be marked as paid in full or paid on time, rather than settled.
The Amount of Principal Owed:
The amount of principal that is owed is the most commonly negotiated item when it comes to a consumer proposal Edmonton. This is because you have a better chance of getting out of debt if the bank or lender agrees to cut the amount of money you owe. Traditionally, creditors and lenders have wanted an upfront settlement agreement to cut debt. For example, if you owe $10,000, they would want you to pay $5000 right away and then they would settle the debt and close your account. However, as more and more people find themselves having trouble paying their bills, creditors and lenders are willing to negotiate. They may cut your principal and still allow you to make payments. However, if you can make a lump sum settlement, you will still get a better principal reduction than if you needed to make payments.
The Interest Rate:
Having a high interest rate causes most of your payment to go to interest, rather than principal. This can make it extremely difficult to get out of debt. If you find yourself making your payments but not seeing the amount you owe go down, you may want to try to negotiate the interest rate. Some lenders will agree to lower your interest rate for a short period of time, such as 6 to 12 months, whereas others will slash it and leave it there as long as you continue making your payments on time.
The Monthly Minimum Payment:
This negotiation tactic should be used only when creditors and lenders are unwilling to budge on your principal or interest rate. This is basically refinancing your loan, dragging your payments out longer, just without jumping through the hoops of applying for a new loan. When a bank or creditor refuses to lower your principal or interest rate, you can ask about reducing your minimum monthly payment. This may be the only way you are able to afford all of your payments. Unfortunately, since they aren't reducing your principal, you still owe the full amount and you will make payments for longer than was originally planned. However, this may be a better choice for some people than failing to make payments or having to file for bankruptcy.
Any Late, Over-the-Limit or Annual Fees:
Credit card fees can add up, especially if you are struggling to stay afloat. Some of these fees can eat up your entire payment, meaning you are paying nothing towards principal and will never get out of debt. If you are struggling to pay down your bills because of these fees, call the credit card company and ask them to stop charging you so that you can pay your debt down. If the company's options are to either work with you or have you file bankruptcy and them not see a dime, most will work with you.
How the Debt is Reflected on Your Credit Report:
The last thing that you will want to negotiate when drawing up a consumer proposal Edmonton is how the debt is reflected on your credit report. The creditor can mark your account paid in full, paid on time or settled. A settled account will reflect negatively on your score, so when possible, you want to negotiate that the account be marked as paid in full or paid on time, rather than settled.
