Once you settle w/Creditors, can you pay in payments?

Question

Say you negotiate a debt of $800 down to $400..does the $400 needto paid immediately or can it be made in payments?
Thank you...

Answer 1

Usually they will want it in one lump sum. And do not send it until you get a letter from them that the debt will considered paid in full upon receipt of the $400.

Then KEEP THAT LETTER.

Answer 2

They must be made in full--no payment plans. Otherwise you have to pay the entire balance through a payment plan, which by the way increases each month due to continued interest.

Also, be aware of any settlement that reduces the debt by more than $600. It's OK to save more than that. You do need to be prepared however that the collector is required to report forgiven debt of $600 or more on Form 1099-C, which could be taxable at your marginal (highest) tax rate.

Answer 3

It really depends on the creditors. When you negotiate, you will also have to talk about payment arrangements. Each company will have different preferences. Most will want it as fast as they can get it, but that doesn't mean they won't accept a payment plan. Just be sure it's something you can stick with.

Answer 4

I have made negotiations like that...the negotiated amount will need to be paid to them in full ASAP. They will not do a payment plan on the negotiated amount....I tried that too.

Answer 5

You need to ask them this while you are negotiating. Sometimes the negotiated price is lower only because they expect payment in full ASAP.

Answer 6

Generally speaking, the total will need to be paid immediately as part of the terms of the settlement.

Answer 7

Typically settlements are only made if you're prepared to pay the amount of the settlement in full.

Answer 8

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