The settlement transaction is no different than a brand new contract with your lender.
The terms and conditions of the contract are very clear.
The lender will give up half of the claim on the debt and the borrower will promise to repay the balance amount over a period of 2-3 years as specified by the lender.
The old transaction is canceled and this transaction is treated as the beginning of the relationship between the borrower and the lender.
Since this is a new contract, there is absolutely no doubt that there are various contractual obligations involved.
Where there is a contractual obligation, you will have to consider legality as well.
If you ignore the legal point, you will be putting yourself at very high risk of being cheated.
What factor should you consider? The first and the most important requirement is that the settlement deal should be in writing.
Your contract with the professional settlement company should be in writing.
The communication between the settlement company and the lender should be in writing.
As far as possible, the company should give you a summary of the reply received from the lender in writing.
Finally, the settlement agreement should be in written form.
Accountability should be clearly fixed and all should be in a position to clearly specify who is responsible to whom.
If this point is ignored or relaxed, you should immediately back out of the deal because the settlement company or the lender is probably out to cheat you.
If you make the mistake of ignoring this point, the professional settlement company may go back on its promises without any legal remedy on your side.
Or, the lender may go back on the promise of settlement and insist on full repayment.
The second point that you should focus on is the payment of fees to the settlement company.
Do not pay all your fees upfront.
Do not allow the settlement company to deduct charges from your escrow account without your permission.
If the same has not been specified in the settlement deal and has not been put in writing, such a right does not exist.
If the point has not been specified, make sure you ask your company for a clarification before proceeding.
Thirdly, you should make use of the regulations put forth by The Association of Settlement Companies and other such trade organizations that govern settlement companies.
This will give you clear idea of where you stand and how you should proceed.
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