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Questions To Ask Your Creditors Before Debt Restructuring

By Spodek Law Group | February 20, 2024

Questions To Ask Your Creditors Before Debt Restructuring

Understanding Your Debt

Before considering debt restructuring, it’s important to have a clear picture of your current financial situation. Here are some key questions to ask:

  • What is the total amount I owe you? Make sure you have the most up-to-date balance and interest rate information.
  • What type of debt is this (credit card, personal loan, etc.)? Different debts may have different options.
  • Review recent statements – are there any errors or discrepancies? Getting the details right is key.

Debt Relief Options

There are a few common options for restructuring debt. Ask your creditors about:

  • Debt consolidation loans – Taking out a new loan to pay off multiple debts. This can simplify payments and sometimes lower interest rates.
  • Balance transfers – Moving credit card balances to a new card with a temporary 0% intro APR.
  • Hardship programs – Some lenders offer programs to temporarily reduce payments for those facing financial challenges.
  • Settlement – Agreeing to pay a lump-sum that is less than the total amount owed. Know this can impact credit scores.

Fees and Costs

Restructuring debt often involves fees, closing costs, or balance transfer fees. Be sure to ask:

  • What fees or costs would be associated with debt relief options? Get specifics.
  • How would enrolling in your hardship program impact my credit score? There is sometimes a penalty.
  • Does settling close the account? Closed accounts can impact length of credit history.

Next Steps

Before deciding on the best option, get clarity on next steps:

  • What is the process to enroll in a hardship program or settle my debt?
  • How long will the offer stand or when do I need to enroll by? Act fast if there is an expiration date.
  • If I start a debt management plan, can I exit the program early with no penalties? Know your rights.

Asking detailed questions upfront will help you make the most informed choice to restructure your debt effectively. Let your creditors know you want to work collaboratively towards the best solution.

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