Debt Settlement

[BigBear]

what is actually involved in the process?

You pay the agreed amount, the debt shows on your credit report as paid as agreed, settled for a lesser amount.

will I get a piece of paper saying the debt is PIF?

No. Settling a debt does not clear it from your credit record. It shows that you settled for a lesser amount. They WILL send you a letter stating it is settled. ... and some lenders may require you to pay the full amount before they will give you a loan.

It's still damaging to your credit. But depending on your situation it may be a life saver.

Settling debts, getting back on your feet and paying the rest off later is better for your credit history than bankruptcy.

I guess this is where the confusion comes in for me (highlighted red)...

Even when I settle, it's not PIF?
I'm still responsible for paying back the full amount even after I settle? When can they start coming back after me for the rest then?


... hope that makes sense. Thanks for your help/answers.

I'm not worried about the damage to my credit as it's already shot to sh!t. I owe the money, I would loved to pay it back plus interest... but settling sounds like a life saver right now....

[Elhuero]

I guess this is where the confusion comes in for me (highlighted red)...

Even when I settle, it's not PIF?
I'm still responsible for paying back the full amount even after I settle? When can they start coming back after me for the rest then?


... hope that makes sense. Thanks for your help/answers.

I'm not worried about the damage to my credit as it's already shot to sh!t. I owe the money, I would loved to pay it back plus interest... but settling sounds like a life saver right now....

if you settle, it's not paid in FULL it's paid as AGREED. You're basically making a deal. You agree to pay them some of what you owe and they agree to accept it and quit bugging you.

Lets say you owe 10k on a credit card. You are way past due and accept a 40% settlement. They're not going to take 4k and say you paid ten, your credit will show that you took a deal.

Your credit will not be "clear", but it will be a damn sight better than having a charge off or worse yet a bankruptcy. You won't have to pay more.

But down the road if you want to buy a house, the mortgage lender may require your credit to be "clear", which would mean you'd have to take care of those settlements.

EDITED TO ADD: MB888 knows what he's talking about

[BigBear]

if you settle, it's not paid in FULL it's paid as AGREED. You're basically making a deal. You agree to pay them some of what you owe and they agree to accept it and quit bugging you.

Lets say you owe 10k on a credit card. You are way past due and accept a 40% settlement. They're not going to take 4k and say you paid ten, your credit will show that you took a deal.

Your credit will not be "clear", but it will be a damn sight better than having a charge off or worse yet a bankruptcy. You won't have to pay more.

But down the road if you want to buy a house, the mortgage lender may require your credit to be "clear", which would mean you'd have to take care of those settlements.

Understood, but what exactly does (red) mean? i.e. I paid the 40% based on the 10K, so now I need to contact the original credit card (or collection agency) company and tell them I want to pay the other 605?

[Elhuero]

Understood, but what exactly does (red) mean? i.e. I paid the 40% based on the 10K, so now I need to contact the original credit card (or collection agency) company and tell them I want to pay the other 605?

You'd have to pay the remaining amount (6k) so that the original, full amount is paid. (paid in FULL)

In the years I worked credit cards I never personally heard of anyone that did this, but it does happen.

[ChunkyMonkey]

But down the road if you want to buy a house, the mortgage lender may require your credit to be "clear", which would mean you'd have to take care of those settlements.

EDITED TO ADD: MB888 knows what he's talking about

As long as it is settled.. there is a trick to remove them completely off your credit report

I only know from experience dealing with creditors and being a 'creditor' myself. I think a bankruptcy lawyer is the ultimate expert on this topic.

[BigBear]

You'd have to pay the remaining amount (6k) so that the original, full amount is paid. (paid in FULL)

Yes, understood. But to whom? The CA or the original CC?

As long as it is settled.. there is a trick to remove them completely off your credit report.

Please share, PM if deemed nessicary.