Debt reconciliation negotiations that debtors need to know

If you are still stuck in the whirlpool of debt, late debt payment problems which increase the debt from thousands to ten thousands and ten thousand to a million, do not run away from those problems because every problem has a solution. The solution for debtors to do is debt reconciliation negotiations with financial institutions.

What is Debt Reconciliation?

Debt Reconciliation is a request for debt negotiation with creditors to help delay or stop operations caused by default such as lawsuits and confiscation, and reduce the burden of debt repayment, especially when debtors are in a lack of financial liquidity situation, and cannot pay the installment for the house or condominium.

Pros of Debt Reconciliation

Debt reconciliation negotiation is useful to close the horrendous interest rate opportunities, help us better plan our finances, and keep us from losing our financial credit history. Debt reconciliation is suitable for debtors with those who do not have much debt burden and are confident that they can afford to repay all of the debts.

Debt reconciliation can be done in many ways.

  1. Ask for a cut in interest rates

    This is a very common approach to house installments over the first three years in which we can ask for interest rate cuts to cut principal and pay debt faster. Credit cardholders can ask for a new interest rate adjustment. For example, you pay the minimum, but if you cannot afford it or the principal is not reduced at all, you can change the interest rate calculation method. Maybe combine the outstanding debt and pay installments in personal loans but they must be canceled from the right to use the card right away.

  2. Ask for a cut in installment – expand the debt repayment period

    For example, we have to pay 20,000 baht per month for the monthly installment of our home, but we are not able to afford it. You can negotiate to lower the monthly installment amount because it will be a default if we still pay the same amount. This method needs to be done together with the expanded period for installment payments. This debt reconciliation is only applicable if the monthly payment amount is at least 500 baht higher than the monthly interest rate. We can request for this reconciliation for once and a lower installment period must not exceed 2 years. This will reduce monthly installments and extend the loan until the age of 70.

  3. Ask for lenient in arrears

    This method allows us to resolve or address any financial problems that occur within a period not exceeding 36 months and then pay the outstanding debt as follows:

    3.1) Ask for a small payment monthly

    It is suitable for people who lack income or unstable income within a certain period, but whose expenditures are so high that they cannot afford to pay installments.

    3.2) Ask for payment in lump sum in installments

    It is suitable for those who are burdened with other expenses, resulting in the inability to pay their house installment payments during the grace period, but can earn money to repay their outstanding debts within the specified period.

    3.3) Ask to pay for all the arrears within a certain period

    It is suitable for people with low or not-that-high overdue amounts, who are burdened by other expenses, so they cannot pay their house installment during the grace period, but can earn money to repay their outstanding debts within the specified period or gain income from selling high-value assets such as houses, condos, land and cars.

  4. Ask for a reduction in fees – fault fines
    Anyone who has defaulted for a few months, until the fees and fines start to rise. We can ask for a reduction in fees or fines.
  5. Ask for the securities transferred to be temporarily owned by the bank and will be repurchased.
    This method only applies to home loan debt. It is the same as selling on consignment and renting your own house. Rent is 0.4 – 0.6% of the value of securities and usually contracts for rent annually. If the debt is higher than the appraised value of the securities, the borrower must pay the difference by the transfer date. This method is suitable for those who expect to have an income loss within one year, allowing them to pay lower rent than long-term installments. The contract will be repurchased. If there is sufficient potential, the creditor will sell it back calculated from the remaining debt amount.

Each type of debt reconciliation is appropriate for each individual financial situation. The most important in choosing the appropriate approach is to assess our financial situation first, how much our income will drop, how long it will take for revenue to come back, and then consider the value of each option.

Negotiation with creditors depends on the satisfaction of both parties, terms, and conditions, duration,  negotiation techniques, installment history, as well as sincerity and willingness to repay debts.

related articles