Settle a debt or pay in full?
If you settle a debt for a lower amount than you owe, is that still looked at as bad??Im trying to repair my credit and although im told that paying off old debts does not really improve your score im trying to pay them off because im looking into trying to purchase my first home in a few years.Someone told me if i settle that it still does not look good because i did not pay back in full. Ill appreciate any feedback espically if you work in the industry where you have to look at peoples credit report to determine whether they qualify. Thanks alot
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July 31st, 2010 at 7:03 pmIf you settle and pay less, it looks a little worse (it reads as a settlement not in full versus a paid in full, late). However, what you can do is offer a full settlement in exchange for a "Pay for Delete" agreement. This means that you pay 100% of the balance, but the creditor removes the debt from you credit bureau records. Not all creditors will do this, but many will.
July 31st, 2010 at 7:03 pmHi C M,
This is a very complicated question, as I’m sure your finding out.
The first thing to know is whether the original debt holder is still trying to collect. If the debt has not been serviced for several months, then it may have been written off by the original creditor and sold to a collection company.
In the first instance you should go ahead and negotiate to see what the creditor will accept, you can also negotiate how the debt will be reported. Insist they say something like "paid as agreed" to credit agencies as a condition of payment.
If the debt has been sold to a third party, then you might consider talking to a lawyer who specializes in debt/credit issues. Often times the third party holder of the debt will not have all of the necessary paperwork to go to court. A good attorney in this area will be able to prove that through correspondence, forcing the the the debt holder to remove any reporting of you to credit bureaus. Attorneys will generally charge a set fee, plus a small percentage of the debt balance for this service.
DO NOT pay anything to third party debt collectors without legal counsel.
Good Luck
July 31st, 2010 at 7:03 pmI am a former bill collector. If you pay it off or settle it you can still have it removed but it will take a few months BUT remember this; the best time to settle a debt is the the last day of the month. Most bill collectors are authorized to settle on the last day of the month for 50% on the dollar, this also helps them collect a higher commission check. You can then have a letter worded the you want (in some cases) that will have it removed within 45 days. Read my article, link below
July 31st, 2010 at 7:03 pmIf it’s charge off credit card debt, it won’t help your credit score…but if you are looking to buy a house, then it looks better that the debt was paid back.
July 31st, 2010 at 7:03 pmFYI: Renewing contact with collection agencies over old defaults may stir up more trouble then it’s worth…many are highly aggressive. See my answer at this link for more info:
http://answers.yahoo.com/question/index;_ylt=AlLriYh9czTqjqmRVClJip_ty6IX;_ylv=3?qid=20100720185044AAilJPr&show=7#profile-info-rnd7j6eLaa