18 comments on “How does Debt Settlement Affect my Credit?”

  1. Al May says:

    I've heard that in FL, if I have medical debt and don't pay it for 7 years, it will no longer be required of me to pay them. Is this true? What are the pros and cons of doing this?

  2. Blacktop Robinowitz says:

    Hi Michael. A couple of years ago, I settled with a collection agency, regarding a medical debt, once I paid them the agreed settlement amount, they changed the listing on my credit report to "Settled." Today, I called the collection agency and asked if I could pay off the balance ($150) and have the listing deleted from my report. They told me that the most they could do is mark it as paid in full. Would this help my FICO score at all?

  3. Gene Barbera says:

    Hi, We are ready to pay and we are looking for a settlement offer after 2 years but the law offices are dogging us for a settlement. They are not taking our calls. What do we do?

  4. Michael Bovee says:

    @Gene Barbera I am unable to reply directly to your comment for some reason. It would help to know who the lender or debt collector is that has your debt , the name of the collection law firm handling it, and whether your account went through the courts in any way.

    Are you looking to get the debt resolved in order to update your credit reports in a positive way? If so, what is your main financing goal?

    The law firm may have lost the file to another firm, or had the account pulled by the owner of the debt.

  5. mysecondchannelable says:

    Thank you for sharing. My credit has been maxed out 20,000.00 in CC debt for over 7years. I have never missed a payment but minimum payments are a death sentence…I tried several strategies but none of them seem to work especially with the high APR . I'm really considering negotiating a settlement. I just don't know what will the impact of the settlement be on accessing credit in the future? job search? Apartment search?

    thanks for reading this and I appreciate your feedback

  6. Simba Perkins says:

    What if I'm looking to rent a home with roommates ?

  7. Abdul Wahab Anwar says:

    What is partial settlement is this is good or bad company told me it will show on my credit report

  8. banks2012cf says:

    My credit score is at 450 right now because I have 11 accounts i haven't paid since dec 2016. Most of these accounts I had for years and always paid on time until december of last year when things went down hill. I've managed to settle 8/11 accounts this month. Ive also been current with car, mortgage and 2 credit card payments since December 2016. What will my credit look like in a month or two when it gets reported?

  9. Thexhale Tobacco says:

    Hi I have arrangement with citi card for 5 year payment no interest .
    I was thinking to break that arrangement then wait until they sale it to collector so I get some settlement and then pay less from what I own them
    I need advice please

  10. Surplus Division says:

    Watching my parents max out card after card. I would eat my left foot before I will get a CC to buy food. If I buy a car I use cash. If I need a house I save up. When I start new business I use cash. The problem is my parents are 100k in debt. I can't allow them to go bankrupt because the family farm would be lost. I make about $16,500 a month and I can't loose a years worth of growth to fix mistakes I had no say in. I'm 27 so i'm just getting started in life. Any Advice

  11. tymela owens says:

    Hello, is debt restructuring and settlement the same thing?

  12. TheFame5000 says:

    There are major tax implications for choosing debt settlement. Subtract the amount you will settle from the actual amount you owe, the balance (what you did not pay back) is considered income, and the IRS will tax you on it ( A penalty)

  13. Mizuki Nelson says:

    Hi Michael – Thank you for sharing! Very good content!
    Question: For some reason, none of my past (2009) debts are showing up on my CRs anymore (YEA!). So, I now have very little, but good credit! However, I still have 5 out-of-state (AR) judgements that I want to resolve. If I settle each of these, how will it affect my CR? Also, what should I negotiate with each (% & terms).

  14. Mizuki Nelson says:

    Hi Michael, how is your credit report/score effected with a debt settlement on a judgement that is over 7 years old? Does it show up at all? Or, does it "re-age" the debt to show up on the CR? And, if so, how long until if falls off again? Thank you!

  15. Cyn Moir says:

    I have been told from a local company that collection debts are rated as a 9. And that even if you should pay them they will still be rated as 9 on your score until they run their course (around 7 years)– that either way it will effect your score the same. Rarely, do collection companies agree to take the debt off your report — but they will note settlement fulfilled. So it stays on your record. In this case it would be better to direct the money you would spend in paying these debts off — to all credit card minimums + a bit more on time — BEFORE Billing Date NOT at the Statement Due Date. Shows you are disciplined & responsibly paying you debts on time. [Especially credit cards =35% of total score] and Morgages, Car Loans. Make sure you are not in DEFAULT on your Student Loans — if are, call & find a payment program with lowering your monthly payments! There are several good payment plans IDR & ICR Income driven. Be careful which one you pick — read up on them and ask questions– some are better than others. Hope this helps some. This fellows videos are generally good — just don't think he covered enough in depth information. Don't take my word for it — do your due diligence and research the "tricks" that can help you. 🙂

  16. Angelica Mata says:

    Quick question: I currently have four credit cards that I haven’t paid in a while and I wanted to either pay them off or settle . What do you recommend I want my credit score to rise since I do need to get a car as soon as possible.

  17. I like no shirts Allen is a cutie says:

    Hello David I have two collections on my account that totals $1017 and I am wondering if I pay them off will my credit score go up? One of the accounts is 6 months old and the other is 3 years old. One account is a Sprint cellphone old bill of $895.00 and the other is a Progressive car insurance bill of $112

  18. D JACKSON says:

    So my situation is I have 2 accounts in collections at the same time I'm also in the rebuilding phase and have since seen my credit score go from 497 to 585. I was approved for a secured credit card, purchased a used vehicle, and was added onto my wife's credit card account. We are wanting to purchase our first home but due to my credit score we are unable to. Will my electing to settle my debt affect my ability to purchase a home if I my settlement is settled and paid complete.

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