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Debt forgiveness describes the practice of a lender forgiving all or a portion of a borrower’s debt. This means he or she does not have to pay the portion of the debt that has been forgiven. Agreements are made on an individual basis and are usually not simple or easy fixes to an individual’s debt problems. For a lender to extend debt forgiveness, a borrower must contact the lender and ask to be considered. The individual must be able to show he or she has attempted to meet his or her debt obligations, will work with the lender to come to an agreement, and will meet all the requirements set forth by the lender to have a debt forgiven.
Individuals experiencing financial hardship that prevents financial obligations from being met for an extended period of time might consider contacting a lender directly. Lenders appreciate hearing from borrowers, as it allows them to find out what is going on, and assess whether there is a way to help ease the burden of the borrower. This is usually the best way to get debt forgiveness, since those seeking it will need to document and prove the reasons financial obligations cannot be met.
Lenders will generally want to know borrowers have tried every way possible to meet financial obligations, and that there is no other arrangement that can be made. They might suggest various payment plans in an attempt to assist the borrower while receiving some form of payment at the same time. Either way, lenders generally will not grant debt forgiveness without an honest effort made toward payment of the debt.
Typically, a lender is more likely to consider a debt forgiveness application if the borrower is attempting to work with the company to find a mutually beneficial agreement. Those seeking forgiveness should avoid being pushy, arrogant, or angry, as this makes a positive outcome far less likely. Borrowers should be prepared to provide all pieces of information asked for, answer any questions, and fill out any paperwork required.
Oftentimes lenders will have certain requirements that must be met to obtain debt forgiveness. They might only forgive a portion of the debt and expect payment on the remaining balance, possibly with lower payments. Borrowers generally must work out a new payment agreement with the lender, and will be expected to comply with all requirements without fail. Some areas have laws in place governing the way debt forgiveness can be handled, as well.
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