Typically when a borrower defaults on loan repayments, lenders wish to forgo a certain percentage of the loan rather than forfeiting all the cash owed in case the borrower becomes insolvent. Debt settlement refers to the procedure of conciliation between the debtor and creditor to diminish the sum of debt owed.  Debt settlement is thought to be an answer to installments that have been due for a long time and a substitute to insolvency.

iStock_000008642715XSmallUsually, the debt settlement procedure comprises of discussions between the organizations that specialize in debt settlement on part of the borrower and the lender to lessen the total loan to a smaller quantity. Mostly, the lender and borrower decide on a certain percentage of the overall unpaid loan to be forfeited by the lender. But, debt settlement cannot be carried out for all kinds of loans. Uncollateralized loans that are not pledged by real assets like vehicle or a house may not be forfeited.

Although debt settlement appears to be the best lawful answer available to past due installments, it is not free from drawbacks. Once a loan is forfeited, the borrower may not be able to obtain unsecured loan like credit card loan or medical treatment installments for a long time. Moreover, even if the debt settlement negotiations are successful, credit reports usually show some evidence of debt settlement hence lowering credit rating of the debtor. Nevertheless, if the creditor agrees during the negotiations to provide a ‘paid in full’, settlement may have no significant effect on the credit rating. Mostly, debt settlement is carried out by institutions that specialize in debt settlement or legal advisors who help lenders in negotiating debt settlement. However, in return for their services, these debt settlement companies usually charge big service fees in the form of a percentage of the total debt owed, or a percentage of the debt amount forgiven along with initial sign-up fee and monthly service charges.

As the debt settlement institutions demand cash to be paid periodically and place it in an account till the time the lender can be paid, therefore, debt settlement may carry on for a long time. Meanwhile, the interest and late fee may keep on accruing and the bills may keep on increasing. Moreover, the creditors may also sue the debtor in an attempt to recover debt and interest or may send the case to the collections agency sooner than required.

Due to the high service fee of debt settlement companies and the extended settlement period, the withdrawal charge of debt settlement companies is fairly high. After a few years of making payments to the settlement companies, clients may still be in the same position as before since most of the amount saved goes to the settlement companies as service fee.

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Clients of CIBC choose from mortgage and unsecured loans, credit cards for different credit profiles, and other products. There are plenty of everyday cards such as CIBC Select Visa, Classic Visa, and Platinum Visa that feature no or low annual fees, authorized spending limits, and other added benefits. The bank offers platinum and standard cards with affordable rates on cash advances and purchases.

There are student cards with airmiles on dining, shopping, hotel stays, and gas purchases. Online tools are available for credit management and travel notifications. Businesses and individual customers are offered international and specialty services, investment tools, credit cards, and other products. Other tools that go with CIBC cards include management tools with personal spend categories, customized categories, custom budgets, and tracking. Customers who try to rebuild credit benefit from secured cards with travel privileges while clients with stellar credit enjoy exclusive benefits.  Customers who opt for travel cards enjoy benefits such as personal and travel concierge, affordable rates, and airline travel rewards.  Holders also earn extra rewards points at participating inns, hotels, spas, and restaurants and there are no hidden costs or fees.  The bank features travel benefits such as online booking tools to book an exotic trip or cruise.

CIBC partners with merchants and hotel chains that offer weekend gateways, tickets for exclusive performances, and travel. Retailers also offer wellness, health, personal care, and other products. Points can be redeemed for accessories and fashion, magazines, digital media, and other items. Items such as bamboo kitchen sets and carbon offsets require less than 10,000 aeroplan miles while items such as electric bikes, laptops, and push mowers require 50,000 to 100,000+ points. There are gift cards for long distance calls, entertainment, and coffee breaks. You can also support charities such as Veterinarians without Borders and Engineers without Borders. CIBC offers premium business cards with no restrictions or blackout dates and travel rewards. Some products combine the features of LOCs and credit cards and feature no annual fees. CIBC also offers investment and wealth management services, day-to-day banking solutions, and other products.

To learn even more about CIBC credit card offers click here.

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