Could a negotiated settlement help you get out of debt?
By Mr Bankruptcy
23rd May 2019
The thought of negotiating a debt settlement with creditors may seem daunting and unlikely route to get you out of debt. Where would you begin? However, it could be an option worth considering when there is expert support available to you.
What is a negotiated settlement?
With a lump sum of money, you may be able to negotiate with creditors a one-off payment to settle debts using this lump sum. If your creditors feel a reasonable amount has been offered, they consider your financial situation is unlikely to change and debts may take a long time to settle, they may agree to the lump sum as settlement, even though it may not be the full amount of money owed.
When would you consider a negotiated agreement?
Not everyone will have access to a lump sum of money. However, if you‘ve sold some assets, been given money from a family member or you’ve inherited some money, you may want to use this to pay towards your debts.
This type of debt settlement is likely to be most effective if you only have a small number of creditors who would have to share your lump sum between them. It can be more difficult to negotiate across numerous creditors as you would be asking each to take a smaller amount from the lump sum than if you were only negotiating with just a couple of creditors.
How does it work?
Once you know how much you have available to pay, you’re clear about the creditors you have and how much you owe each, then negotiations can begin. The challenge is that you are asking creditors to write off part of your debt to them, so they need to feel that this is the best outcome given the circumstances. The art Negotiating is as much about feelings as it is about hard figures and to be successful everyone needs to feel they’ve got something out of them. If your creditors feel you’re acting in good conscience and the amount offered is considered as reasonable as possible, then negotiations can come to a satisfactory conclusion for all sides.
What should you consider?
As with all debt management solutions, there are potential positives and negatives that you need to consider when deciding whether it’s the right course of action for you:
• Debts are written off even though less than the original debt owed
• It may help avoid bankruptcy
• Once agreement is reached you will no longer be pursued by creditors
• You can pay debts off early
• Creditors do not have to accept the lump sum offer
• Creditors may want the full amount repaid if they know you have a lump sum
• You need to find a lump sum
• It can impact your credit rating which could be on file for six years
• It can take time to negotiate a settlement
• Unlike an Individual Voluntary Arrangement (IVA) there is nothing preventing a creditor from continuing legal action until the agreement it reached
I always advise anyone with an unmanageable debt to seek expert advice when considering a negotiated settlement, to help give them a broader perspective on all debt management options and to help them to conduct a successful negotiation.
Professional advice from James Rosa Associates
Please be advised that this is a very general overview and should not be taken as formal advice. Every case depends on your circumstances and my advice is to seek advice to explore your options.
James Rosa associates is a firm of debt negotiators, debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors facing unmanageable debt or involved in civil or commercial disputes.
Our services include:
● Insolvency support
● Personal assisted bankruptcy
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Are you eligible for a free consultation?
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 680 7217 or email firstname.lastname@example.org to explore whether you qualify for a consultation.
Fact or fiction – what do you really know about bankruptcy?
By Mr Bankruptcy
2nd May 2019
The thought of bankruptcy is undoubtedly scary for businesspeople but this is often because of the horror stories we hear.
If we could dispel some of the stories surrounding the bankruptcy process more people could begin to think about their options based on facts, not fiction.
Seek specialist bankruptcy advice
To make sure you really understand what bankruptcy means, whether it’s the best option in your circumstances or whether there are others to consider, I always recommend that you speak to an insolvency expert rather than listen to a mate in the pub, which is where many of the scary stories around bankruptcy probably originate.
So here are some common myths that I hear from clients that I’d like to kill off.
• You’ll lose everything. If there are specific “tools of the trade” that you need to continue working or for your business you will usually be able to keep these so that you can continue to earn an income. Neither will you lose those items necessary for a basic living for you and your family. It’s not even necessarily the case that you’ll automatically lose your home or car.
• You can’t work when you’re bankrupt. There may be some limitations put on the type of work you can do but it’s in no one’s interest to prevent you from working as you need income to make repayments, pay rent etc.
• Everyone will know. The public can go to the Insolvency Register website and search for you by name, and announcements will also be made in The Gazette, which is an electronic publication of notices and not the most thrilling read unless you work in a financial institution. It’s not likely the general public will see your face splashed on the front pages unless you’re a tycoon, but there is usually a small ad buried in the local paper.
• I won’t be able to open a bank account. Your bank accounts are usually frozen but you can request access once the bank has talked to the Insolvency Service. You can also open a new Basic Bank Account or a Post Office card account to receive wages but you will have to declare you’re a bankrupt.
• I’ll have to go to court. This can be a daunting prospect but bankruptcies are not normally conducted in an open court. You may need to see a judge (if a creditor is trying to make you bankrupt and you wish to dispute it), who will ensure you understand what you’re doing, but you can now file your bankruptcy online and conduct it through calls (although this may vary depending on your circumstances).
• I’ll lose my home. If there is equity in your home, the Insolvency Service will usually appoint a Trustee in Bankruptcy to make a claim against your share of this this, but it is not the case that you and your family will find yourself on the street as soon as you’re declared bankrupt; alternatives to selling your home will be considered.
• Bankruptcy lasts a long time. Bankruptcy appears on your credit file for 6 years and the bankruptcy is usually automatically discharged after 12 months, but this can depend on circumstances, such as your level of cooperation
James Rosa Associates
At James Rosa Associates our debt advisors and debt adjusters are supportive and friendly, helping individuals and business owners/directors to reach swift and cost-effective resolutions to unmanageable debt problems, civil or commercial disputes.
Our services include:
James Rosa Associates are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email email@example.com to explore whether you qualify for a consultation.