SoftSettle Support
A set of client protection principles have to be considered in a creditor-debtor deal and we recognized a need for a discussion forum to the effect of the consequences encountered by the clients who default. As such we have analyzed how default happens in certain countries like India.
Default is particularly challenging because it pits the lender’s need for institutional survival against the difficult circumstances of the defaulting customer. As a microfinance lender, how would you think about a customer who stops repaying?
•As a potential threat to the institution’s financial health?
•As someone to penalize to set an example, so other customers will know you are serious?
•As someone who is taking advantage of good borrowers who pay on time?
•As someone with many excuses, not all believable?
•Or, as a case to turn over to a collections agency and never worry about again?
These are often the ways lenders characterize non-paying clients as they dispatch collections officers to do whatever they can to get the money back. Lenders with conscience find this part of the business unsettling, but unavoidable. Many a lender who started out softhearted soon realized that having flexible, or ‘soft’ strategies led to rising risk. The loss of any single loan is a small threat, but many defaults can destroy the business. When word gets out that a lender is lenient, mass default can infect the whole market. We’ve all seen it happen. The defaulter’s perspective may be completely different. Most serious defaulters are in financial distress and often in the midst of other life crises. A sick child, spouse, or parent needs expensive medical treatment. Another borrower’s entire crop was lost due to drought. Another elderly borrower was robbed of her goods while exiting from a two-hour bus ride to the market. Defaulting customers are already likely to be full of anxiety because their lives are not working as planned. The consequence of non-payment may be only one among many major concerns.
Some of the borrowers were interviewed in India, and it is reported that they often make sacrifices they consider “unacceptable” in order to stay current on their loans.
They skip meals, sell possessions, or take their children out of school to save on school fees. These sacrifices happen on the way to default, so it is safe to presume that most defaulters have already applied similar patch-work remedies. And as they struggle to remain current on their debts, say by taking another loan, the chains may only get tighter. Ordinary people in bad situations are not liars and cheats—at least not until pushed by crisis into desperate measures. Clients like these need help and compassion.
There are enough laws in place to protect the borrowers from harassment and torture. However, we must remember, at the end of the day, banks have the right to recover the loan from the borrower
As such for the relief of the debtors/borrowers SOFTSETTLE SUPPORT has come up with a new unique platform under the brand and banner of SOFT SETTLE.
Let us now think about settling the debts with Creditors.
If you settle a debt, you get a creditor to agree to accept less than the amount you owe as full payment. But a lot of painful things have to happen first.
If you are worried about falling behind — but haven’t yet — you won’t be able to settle. A creditor or collector is not going to accept less than you owe if there’s reason to believe you could pay the full amount that you originally agreed to.
Debt settlement comes into play only when you have many late or skipped payments and possibly collections accounts. Your credit scores will have been shredded; you feel hopelessly behind; your income isn’t enough to keep up with your debt obligations.
As a general rule, people who pursue debt settlement can’t afford to pay off all their debts. A successful settlement allows them to walk away without having to pay everything, potentially saving them a lot of money.
The creditor should consider it will receive as much as it can from the settlement and wipe an overdue account from its books.
Hence escaping from the problem is cowardice. It is the right time to ponder over options and do not undergo emotional stress which could end up losing your asset. Soft Settle is there to support you so far you are intent to pay off the loan that should be evident to the creditor.
The other thing Bank would enjoy as Soft Settle provides the platform for resolution, where debtor would be alerted in each intervals during the period of repayments like early intervention, middle level intervention and final intervention. Hence there is no opening for the debtor to go for frequent defaults and the debtor will be saved from being subjected to the harassment and pressurization of the Recovery agents authorized by the Banks and above all from getting clasped in between the sharp claws of CIBIL.