What is Loan Settlement and How Does It Work?
Life doesn’t always go according to plan. Financial setbacks — like job loss, illness, or sudden expenses — can make it nearly impossible to keep up with loan repayments. If you’re struggling with overwhelming debt, you’re not alone. For many, loan settlement offers a practical way to resolve debts and start anew. But what exactly is loan settlement? How does it work, and what should you watch out for? Here’s a human perspective on everything you need to know. The Basics of Loan Settlement Loan settlement — also known as a One-Time Settlement (OTS) — is an agreement between you and your lender to pay a portion of the total outstanding debt as a final settlement. Unlike paying off your loan completely, settlement involves offering a lump sum that’s lower than what you originally owed. Lenders consider loan settlement when they believe it’s better to recover a portion of the loan rather than pursue full repayment, which might not be possible if you’re facing genuine f...