credit experts how bad is a settlement on your credit?

Question

I have lots of debts and I was planing to go to those companies were they settle your accounts and settle only half and pay the rest to have some good on my credit and rebuilt it but is this possible?

I would like to settle this accounts my self but the company would settle and I have to keep making payments with my creditors but the amount of the total debt now would be half

Answer 1

Take the money those agencies charge you and put it toward your debt and do the work yourself.

Get all three of your reports and look at every item there.

Then type out a letter to each place offering a settlement amount to be paid, by certified funds/ money orders, as soon as you get the copy you will enclose of the letter you send them signed and returned to you. This means they accept your offer. Do not even send a personal check as some of the very unscruplous will only use it as an automatic deduction and take the whole amount of the debt.

Then your best bet is to keep off the phone and never give your bank account info to any of them. If called ask that all communication be by mail ONLY and do not TALK to them no matter what they say. Tell them to put it in writing and hang up!

Answer 2

Both the guys answering above gave good advice. I cannot stress how much that you get the agreement in writing! And save it! Also, make sure that you get them to either agree that the debt will be shown as "paid as agreed" on your bureau report (which they may not agree to do) or at least "settled in full" on your report. That way it shows you paid the correct amount and tried to resolve the situation. It still will not result in a perfect credit score even when you have finished the settlement, though, so don't hope for a miracle there. However, the longer time passes and that you continue to pay your bills on time, the less these derogatory items will matter to your score.

I have to reiterate that you can handle the settlement negotiations yourself for much less cost than going through most debt management companies. You can also try CCCS in your area; they charge only a nominal fee for their assistance in working out a payment plan. However, you have to especially be sure that the additional requests that I have suggested are made; they do NOT do these on their own accord.

Answer 3

As a lender, settlements are debts not paid.
It will show on your credit as "settlement accepted" or "settled for less than amount owed" and a 0 balance.
The good thing about settlements is that you end up paying less - not the full amount - and they quit collecting. If you have a lot of debt, it might be a good start rather that walking away from everything altogether
The bad thing about settlements, is some lenders see part of the amount is paid and not paid in full. Depending on the lender, some don't see it. I'm one that would.

Answer 4

You don't need to go to one of those companies. There isn't anything they can do for you that you can't do for yourself.

A settlement, whether negotiated by you or someone else, will still list on your credit report that you have late payments, but if you make your settlement, it'll say "PAID AS AGREED" and it won't show as an outstanding collection item anymore.

Most lenders are probably going to be very eager to settle with you, since they want to avoid any more default. If you make a settlement offer, you'll be expected to pay the agreed-upon amount immediately.

You can also ask your lender to make special arrangements with you. Typically, they'll lower the interest rate and the payment for some specified period of time to help you catch up.

Answer 5

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