This is when you can pay the agreed settlement amount in one go, if you are able to pay in one go than we can negotiate the best discount.

The advantage with an OTS is that we can negotiate the maximum discount which will depend on, where you would be in the debt cycle i.e. how many EMI you have missed, how old is the debt, NPA (non-performing asset) or written off, any ongoing legal action.

The disadvantage is that you may need a significant amount of cash at one time to settle. If you are not in that position than you can start to save the money until you have significant amount. There are debt relief companies, who you pay a set amount every month and when they have significant amount will undertake to do the settlement for you.

If you do decide to use a debt relief company then ask them:

1. How much their service costs and what are their terms and conditions.
2. How long it will take to get the settlement and how much addition interest and charges would be added onto the debt during that period.
3. Who would deal with the debt collection calls, creditor’s harassment and creditor’s legal action?
4. What proof do they have that the lender will be able to do your settlement?
5. How much money you must save before they make a settlement offer to creditors.
6. What are consequences if you fail to make timely payments.
7. They will have a dedicated account (escrow account) where your money is held, what are your rights regarding this escrow account and proof that the escrow account is held in an insured financial institution.
8. In the unlikely event that the company fails or becomes insolvent what would happen to your money?