A lot of us these days are thinking of getting into the debt settlement (“DS”) business but we still do not know what the underwriting guidelines are for enrolling a qualified client into a DS program. When talking about underwriting a DS client,we are not thinking about how to qualify a client for a new loan or revolving line of credit. Instead,we are just reviewing the client’s overall financial situation to see if the client can make the necessary monthly payments into the client savings account each month during the term of the DS program. Therefore,when applying DS underwriting guidelines,we are not talking about a maximum DTI (debt to income) ratio at all. Instead it’s just a bit of common sense that is being used when underwriting a potential DS client.
There’s three unspoken underwriting guidelines for a debt settlement program. Read on,we list them below:
- You will need to figure out the maximum term for the DS program. For example,the maximum term may be 30 months for total debts in the sum of $12,500 to $20,000 whereas some back-end DS companies will allow the program to be as long as 48 months for debts totaling more than $30,000.
- Most DS companies have minimum debt amounts and minimum monthly contributions. Minimum debt may be from $7,500 to $10,000 at most DSCs while no individual unsecured debt will be accepted below $500.
- Clients must have a job or some source of monthly income that shows that they can make the monthly payment to build up funds for the settlements with the creditors. One back-end DS company that we recently contacted required all clients to be able to provide a minimum of $275.00 per month in the client savings account.[dcl=7360]