Due to the current recession, unemployment, salary cuts and lay offs are rampant.
Due to this many debtors are unable to repay their loans.
Many customers are forced to file for bankruptcy, but some are in a relatively better financial situation and can opt for debt settlement instead.
But before enrolling for a debt settlement program offered by the creditors, it is important to know the rights of a debtor.
First and foremost the creditor should inform the debtors of the payment due date.
This will help them in preventing their accounts from becoming delinquent.
Moreover, if the creditor is undertaking legal proceedings against the debtor, he or she should be forewarned.
Other wise the debtor has a right to refuse to adhere to any legal decisions taken to attach his or her assets.
There are other rights that a debtor is entitled to if he or she opts for a debt settlement program.
The creditors should assess the debtor's actual paying capacity before negotiating and reaching a settlement amount.
The amount payable should be in accordance with the debtor's current financial situation.
The creditors should provide the debtor with the opportunity to consolidate the loans.
The debtor can then pay off various high interest loans with a single low interest one.
This will lower the rate of interest and hence the amount payable.
The debtor also has the right to convert unsecured loans into secured ones.
The debtor has the right to demand a letter of full and final settlement from the creditor.
This letter states that once the settlement amount is paid, the debtor does not owe the creditor anything.
Not knowing these rights may prevent debtors from getting the best deal.
Hence it is important for the debtors to know their rights before they get a debt settlement.