When we think of the term creditor, most of us shrink at the thought of owing someone money. Used in the financial world, the term “credit” originated with a chance percentage of whether or not someone would pay back their loans or not. In the early days, a person’s dependability or personal reputation had a lot to do with their ability to pay their bills on time or repay their loans. If these were not paid, the “shooster” was considered undependable and shiftless, and then ran out of town on a rail.
Successful settlement negotiation with a creditor is always preferred and desirable so as to close the records of the account permanently. A creditor is a company, a bank or an individual to whom a person owes money, following the use credit facility or a loan and such owed money is kept pending or unpaid.
Today, almost everyone owes money to someone, with the recent housing mortgage problem a prime example of it. In this case, the creditor would be the bank who actually owns the homes now being repossessed, while the debtor would be the one not able to pay for their home mortgage loan.
The creditor wishes to settle the outstanding dues of a debtor and close the account records by any means possible. But it depends on what kind of debt it is, for how long the debt is kept unpaid, the credit rate of the debtor and the type of creditor involved.
In the case of mortgaged homes the creditor bank ends up taking the possession of the house back from the debtor so that they can recover the money owed to them which is not being paid and is kept as over due outstanding. Typically the homeowner either by choice walks away or by forced eviction.
In such a condition a repayment plan is to be negotiated with the creditor to bring back the credit on track. It is a preferable solution to both parties. In such a case the payment plan usually will be shorter than the scheduled original period. Bankruptcy may occur following unresolved problem, when the creditor is unable to workout the payment plan with the debtor.
Most debtors or individuals who owe money know very little about bankruptcy, with the majority knowing little about finances. Additionally, bankruptcy has changed a lot in the past year or so, in comparison to filing in the past. But over the years, money issues have compounded to the point that most relationships are in serious trouble because of them mainly due to lack of communication, as money represents different things to different people.
Another thing to remember is this, the creditor may have a list of outstanding bills that a person owes but some of the creditor’s documentation may not be correct due to human or system error. The bureau can be notified in order to remove the errors, which is why it is important occasionally to obtain a free credit report to keep check on its status.