Financial rehabilitation plays an important role when it comes to dealing with insolvency. Any individual who is sequestrated needs to undergo a rigorous process with the help of professional debt management firms like Elite Document Management Services.
The best part is that the process yields significant benefits that lead to financial stability. A court of law can order rehabilitation based on the financial status of an individual. The order is triggered by one of two types of insolvency: factual and commercial insolvency.
According to Elite Document Management Services, these types of insolvency differ in that the commercial variant also includes individuals whose assets still surpass liabilities. In both cases, rehabilitation can occur by order of a court of law or automatically.
In the latter case, the process is triggered by provisional sequestration. As a result, the rehabilitation process commences 10 years after sequestration. Alternatively, an individual can lodge an application with a court of law four years after sequestration.
In many cases, indebted persons can offload up to 80 percent of their debt by opting for voluntary sequestration. The remaining portion of the debt is repayable over an agreed period. This approach has been shown to help people regain control of their finances and enjoy a debt-free life. The process eliminates any additional claims on the post-sequestrated estate. In turn, it becomes easier to start afresh without the burden of debt.
The benefits of retaining control of finances outstrip the unpleasantness of having a court-appointed curator manage the distribution of proceeds to the creditors. The same applies to the downsides associated with a change in the status of the credit record to bankrupt or insolvent.
At the end of the financial rehabilitated process, an insolvency lawyer checks credit databases for instances of judgment notices linked to the debtor’s name. The attorney will ensure that any notices appearing against the sequestrated individual are expunged. As such, the removal of judgment notices leaves the concerned person with a clean credit record. On the other hand, the credit record will indicate that the individual was financially rehabilitated. This entry is automatically erased from the record after five years.
Although financial rehabilitation is a time-consuming process when compared to other debt settlement processes like loan consolidation, it is the best solution for default recovery.
The approach enables indebted persons to eliminate extra debt collection costs. Additionally, individuals benefit from the removal of default entries from the credit record. As a result, the credit score will improve regardless of entries indicating late payments leading to the default.
Debt consolidation measures cannot result in the removal of the default from a credit record. This option also fails to eliminate additional collection costs. Instead, debtors face increased costs by up to 18.5 percent of the outstanding balance. Hence, the need to opt for financial rehabilitation.
Financial rehabilitation companies
Freedom Debt Relief. This firm has helped more than 500,000 clients solve their financial problems. It has branches in over 30 states, which enables more Americans to find help and live debt-free lives. This company is a prominent and founding member of the American Fair Credit Council and other professional bodies.
Elite Document Management Services offers professional debt monitoring and financial rehabilitation services. Its programs are tailored to the needs of each client. The firm offers superior service thanks to its highly experienced and knowledgeable staff.
CuraDebt. This company offers quality services without inflating the costs for its clients. It is accredited with IAPDA and AFCC.
Elite Document Management Services
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.