Going after a borrower for the payment of his loan is no easy task. As soon as the loan becomes due, the lender has to do something to collect payment; otherwise, the borrower may run away. Although there are many ways for the former to go after the latter, most of these are very expensive. Filing a lawsuit against the borrower, for instance, is one of the most common ways utilized by lenders whenever the money they loaned is not paid.
Even if a judgment ordering the borrower to pay the loan is obtained, the lender may still not receive anything because the former has no more properties that can be sold. This is the reason why modification is highly suggested in settling disputes on unpaid loans.
Resorting to Long Island loan modification can give the following advantages:
1. Term of payment is lengthened
A modification can lengthen the term or period needed to pay the loan. This is advantageous for the borrower because it will give him more time to manage his expenses and save money to eventually pay the loan. This is also advantageous for the lender because it will ensure him that the money he lent will soon be paid.
The only thing that the lender must bear in mind when lengthening the term of payment is not to allow the borrower to pay the loan perpetually. He must still fix a certain period for the latter to pay the loan.
2. Interest rate is lowered or removed
One of the best things about resorting to Long Island loan modification is that the interest rate can be lowered. This is advantageous to the borrower because he’ll get to pay an amount which is lower than what has been stated in the original agreement. In most cases, however, if the lender has seen that the borrower will take a long time before he can fully recover, the interest rate of the loan can even be removed. This means that the borrower will only have to pay for the principal amount of the loan.
This is also advantageous to the lender because he becomes a potential source of fast cash for those who urgently need it. Future borrowers will not hesitate to go to him whenever they need money because they know that it will not be difficult for them to repay him. However, this is still subject to the strict qualifications that must be observed.
3. Lawsuits are prevented
Resorting to Long Island loan modification prevents the lender from filing lawsuits to recover the payment for the loan. The negotiation process between the lender and the borrower allows them to know the financial condition of each one. This is advantageous to the borrower because he does not have to risk his reputation and property to get away with the lawsuit. This is also advantageous for the lender because it lets him save money which he could have used in filing cases. Lawsuits must be used only as a last resort in certain circumstances, such as when the borrower left the country and he cannot be found.
Resorting to modification also suspends a pending lawsuit against the borrower. This is commonly known as a compromise agreement.
4. Properties are protected
Resorting to modification protects the properties of both the lender and the borrower. It protects the lender’s money from being taken away by the borrower. It also protects the properties of the borrower from being forcibly sold by the lender.
COOPERATION OF BOTH PARTIES
In a way, Long Island loan modification forces both the lender and the borrower to cooperate. If they do not, both of them will be at a disadvantage.