A One Time Settlement (OTS) is a debt resolution strategy where you agree to pay your creditor a single, reduced lump-sum amount, which is less than the total outstanding debt. The core benefit of an OTS is immediate and complete closure of the loan account, often with significant savings. It’s ideal if you have access to funds to pay off the reduced amount quickly.
In contrast, a Term Settlement involves negotiating a structured payment plan where you pay reduced, affordable installments over an agreed period to clear your debt. While it offers ongoing relief from high EMIs, the loan remains open until the last payment.
Key Difference:
- OTS: One lump-sum payment for instant closure and maximum debt reduction.
- Term Settlement: Multiple, smaller payments over time for ongoing affordability and gradual debt resolution.
Both aim to reduce your debt and provide relief, but OTS offers a swift exit, while Term Settlement provides a manageable payment structure for those who can’t make a lump-sum payment.