The Consolidation Loan Procedures Step By Step
When a borrower goes in for a debt consolidation loan, the company giving the consolidation loan is required to follow very specific procedures. The following are the stages that the loan request must goes through: · Personal information Any debt consolidation company checks on the credentials of the person applying for the loan and review the same before approving the loan. The borrower has to give all the necessary personal information required, so that there are no delays or cancellation of loan application. · Consolidation loan verification procedure Verification of the request for a loan is a very important next step for a borrower. Most consolidation loan companies provide you with a verification certificate, which has to be filled out and submitted to them within a stipulated time period. · The ICR Plan Anyone who wants to use the Income Contingent Repayment Plan (better known as the ICR Plan) must furnish the consolidation company with the relevant papers and the ICR Consent to Disclosure of Tax Information form as well. This is then submitted to the IRS in to approve the consolidation loan request. · Opening a new consolidation loan account When the request for the consolidation loan has been verified and accepted, the agency opens an account for the borrower and gives him access to all of his loan information, such as due dates for payment, general status of the loan etc.. The borrower is expected to keep paying his previous creditors until he receives notification that the consolidation loan has been approved and processed. · Filing of consolidation loan statement Once all the paperwork has been completed, the borrower is given all the details and information about his consolidation loan statement, the total payment made to other lenders through the consolidation loan agency, the total amount of money owed by the borrower to the consolidation loan agency, the time period of the loan, the rate of interest and so on. Filing this information helps you keep track of all payments made and those that are still pending. · Final payment to creditors In event the borrower has no defaulted loans from previous loan holders, they are just sent a loan pay-off by the consolidation loan agency. If the debtor already has a previous loan in default, the consolidation loan company has to calculate the total amount along with the principal and interest rates and send the sum of money to the previous creditor. Once the loan holder receives the above, he is expected to discharge the debt and also let the borrower know that his loan has been paid off in full. This releases the borrower from any obligation of prior loans. In case the borrower pays the previous holder a sum of money, this is considered as an overpayment by the consolidation loan agency. Many of these companies bar the borrower from having any payment dealings with the previous lender and take care of the overpayment and underpayment issues themselves, in order to avoid future confusion for both the creditor and the borrower. |
