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[nissim42]

I owe a company some money, they offered to take a settlement that was lower than the amount I owe. If I take up this offer will it hurt my credit?

[Abran]

kevin104 said: 1 Ckott72, regarding your answer "Not as bad as an uncollected debt, but it's still a headache.":Thanks for the great response, it answered my question and then some! 84 months ago

[Chess]

In my undergrad days, I worked for one of the(then) main three credit bureaus, in the reports department.  We took all the raw data on a person, and produced a report to home mortgage lending companies.   Make sure you get in writting what ever they're offering.  Then, once paid, get that in writting.   In my  experience, an uncollected debt of greater than $15 would go on your report as exactly that: a current, uncollected, defaulted loan.   If on the other hand, you reach an agreement with the holder of the debt, it will be listed as bad debt that has been taken care of.  They'll report that the debt has been forgiven.  This makes you look more responsible to any new would be creditor.  Once it's paid off, the clock starts on when it can no longer be listed on your report.  While it is true that the clock started as soon as you first defaulted, creditors sell debt to each other, and start the clock over each time it's sold.  This is(or at least used to be) illegal, but they do it anyway.   Now for the bad news.  The collector is supposed to report that your debt is paid off the next time they update their database with the credit bureau.  Collectors don't need to have a relation with these bureaus, so often never report that the debt has been paid.  You will probably have to order a credit report after paying the debt.  Wait 3-6 months, and then challenge the debt.  The reporting agency will investigate.  When they find that the debt is paid, or if they can't find anyone to say they are still owed money, it is removed from a current debt status.   The next big hiccup.  The credit bureaus(reporting agencies) don't communicate with each other in any kind of streamlined fasion.  So, if one of them takes too long to clear the matter, they may update with one of the others when someone runs your credit(think of all the card offers that you don't ask for).  This update might put the debt back in the current status accidentally.  Also, any company that ever held this debt might also keep updating the debt too.  You'll need to contact each of these companies directly if this is the case.   Now for the slightly good news.  Many people(myself included) pay the collector, they report it, and pretty soon everything is fine.  Because of fair reporting laws, you do have legal recourse if this debt keeps showing up through no fault of your own.  Collectors don't care if you try to sue them, it happens too often.  However, reporting agencies don't like it.  They might not be very helpful at first, but if they receive even a letter from a law firm, they'll usually jump to fix the problem.  And a letter won't cost you that much.   Paying the debt will improve your credit standing, especially if they are the original holder of the debt.   BTW, using a third party company to consolidate debt and lessen the total load, will hurt your credit... a lot... for many years to come.  If you can, just pay the company that you owe whatever they'll settle for.  That is the best choice for your credit.

[Adaiah]

Ckott72, regarding your answer "Not as bad as an uncollected debt, but it's still a headache.":Thanks for the great response, it answered my question and then some!

[Rorke]

This is a tough answer Working for lawyers(or as I called liars) for 20 years. I've taken a many a partial settlement. First of all when it gets this far your credit score is already affected. Depending where it is in collections,the company has already wriiten this off. They have added collection costs and possibly attorney fees. After the settlement its marked as a sif or settled in full. Your credit still shows a balance remaining but,it cant be collected since you settled it. The only way it can be done is to pay it in full and even then,the company doesnt have to change your rating. Its probably what you didnt want to here but,its better than getting a judgement against you. Good Luck semperfibulldog 84 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.

[Alric]

Working for lawyers(or as I called liars) for 20 years. I've taken a many a partial settlement. First of all when it gets this far your credit score is already affected. Depending where it is in collections,the company has already wriiten this off. They have added collection costs and possibly attorney fees. After the settlement its marked as a sif or settled in full. Your credit still shows a balance remaining but,it cant be collected since you settled it. The only way it can be done is to pay it in full and even then,the company doesnt have to change your rating. Its probably what you didnt want to here but,its better than getting a judgement against you. Good Luck