Debt Collection FAQs: How to Avoid Payment Plan Pitfalls
Setting up a payment plan should never be your starting point for negotiations during debt collection. As a creditor, you are under no obligation to accept payment installments unless specified in the original credit agreement. But that doesn’t mean you should refuse to consider a plan – particularly if the alternatives are beginning to look bleak. Why Creditors Might Offer a Payment Plan In many cases, a payment plan can be a mutually beneficial compromise. When the debtor really cannot pay the full amount, you’ll have a better chance of settling the debt by accepting smaller, regular payments. Certainly, reviewing an offer of a payment plan is preferable to pursuing expensive and uncertain court proceedings. In today’s fraught financial environment, however, this more compassionate approach can also go a long way towards fostering trust and preserving goodwill with customers. Inevitably, as cash-flow pressures mount due to higher inflation, higher interest rates, and supply-cha...
