It is common that when you finalize the payment of a debt contracted with the bank, you do not request proof of payment. This document formalizes the conclusion of the commitment and can give you peace of mind not only of the duty fulfilled, but also that in relation to that debt there will no longer be negative ratings in the Credit Bureau.
The need to request the settlement letter becomes evident when a strange situation occurs: that, as if it were sprouting, the liquidated debt continues to grow.
The importance of the settlement letter is evident: it protects you by stating that you have completed the payment of the debt. Photo: Pixabay.
What is a settlement letter?
The settlement letter is a document that formalizes the term of the relationship between a debtor and a creditor. It is issued by the bank or financial institution to state that the debt no longer exists, it has been liquidated.
Why is the settlement letter important?
The importance of the settlement letter is evident: it protects you by stating that you have completed the payment of the debt. The letter is obtained as a precaution, nothing may happen, but what if it happens? It may happen that the letter is not requested and that the debt is kept alive, before the bank it appears as a delinquent debtor and the payment with which the debt was settled can be taken as payment.
The settlement letter is a guarantee that your account is at zero; For this reason, the registration of that debt must be canceled in the bank’s database and in the Credit Bureau.
How do you request the settlement letter?
As soon as you pay off the debt and notify the bank, you can demand the settlement letter, some banks or financial entities deliver it at the moment, others may take up to 40 days.
If the debt you settled is from a credit card and you decide to cancel it, ask the bank or the entity to be a zero account statement, in any case ask for the settlement letter.
Take this into account
If you have debts, create a settlement plan, stick to it, and settle them. Don’t forget, when you get rid of that burden ask for the settlement letter (s).
What to do when it comes to credit cards?
In this case, you have these following options:
Restructure, so that you can negotiate with the financial institution or the bank the payment conditions of your card: the term or the interest rate. The advantage you have of restructuring is that they will extend the term to pay or improve the conditions and reduce the amount of your debt. Consolidate: You can resort to this option when you have several debts. With this, each month you will make a single payment, instead of several, the amount of that payment can be adjusted more to your capacity and if you make them in a timely manner, you will maintain a good image in the Credit Bureau.
Protect your finances
Even if you have settled your debt, some cards continue to charge you commissions such as the annuity and can generate another debt. If you have decided to stop using your credit cards, because you feel that you cannot control them, cancel them and that way you will free yourself from commitments and pressures. For you to make this cancellation, the settlement letter also serves you.
More information in our Credits Section.