QUESTION
Will my credit get worse if I settle and pay less than what I owe just to end the collections?
Asked on Mar 04th, 2013 on Bankruptcy - California
More details to this question:
They sent me an offer saying if I pay it all off at once, then I only have to pay 50% of the bill. Will that hurt my credit? It's better than nothing, right?
8 ANSWERS
Family Law Attorney serving Rolling Hills Estates, CA
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John H. Sibbison, III Professional Law Corporation
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Your credit has already been affected. The compromise offer sounds like a good deal to me.
Answered on Mar 06th, 2013 at 12:33 AM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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No one can predict how or if you credit will be affected. Make sure you understand the tax consequences of any debt settlement.
Answered on Mar 06th, 2013 at 12:19 AM
Civil Litigation Attorney serving Fort Lauderdale, FL
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Angelo "Tony" Marino, Jr., P.A.
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People who are subject to collection companies hear this. We consumer lawyers very, very seldom lose cases to the collection companies. Moreover, we generally get the bad marks off the credit reports from the collection agency. Our fees are very reasonable and most of the time we get our fees from the collection companies.
Answered on Mar 05th, 2013 at 11:23 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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It will be reported to the credit bureaus and to the IRS, as income resulting from the forgiveness of debt.
Answered on Mar 05th, 2013 at 11:20 PM
Business Law Attorney serving Bingham Farms, MI
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James T. Weiner, P.C.
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It might hurt your credit but its not a significant hit..50% is a good settlement.. if you can afford it go for it.
Answered on Mar 05th, 2013 at 11:16 PM
Insurance Litigation Attorney serving St. Petersburg, FL
Partner at
Gallagher & Associates Law Firm, P.A.
3 Awards
The devil is in the details. You need to inquire if they are reconciling the 50% payment as "paid in full" or a compromise of the debt. The way in which they will reconcile it, both for tax and credit reporting purposes, will dictate if your credit gets worse.
Answered on Mar 05th, 2013 at 11:12 PM
Debt Collection Attorney serving Chicago, IL
Partner at
Edelman, Combs, Latturner & Goodwin, LLC
2 Awards
This question cannot be answered without review of your credit (is this the only negative item, one of many), and the facts relating to the debt (do you owe it, is there legitimate dispute, how old is it), and possibly not exactly in any event (because scoring formulas are only generally known).
Answered on Mar 05th, 2013 at 11:06 PM
Your credit will take a hit. But no as much as a closed account.
Answered on Mar 05th, 2013 at 11:03 PM