Proper way to settle debts
Date: Wed, 09/09/2009 - 15:23
My wife and I have been in some financial troubles for the past 2 years and we have been slowly taking care of our debts but recently received a settlement that will allow us to take care of all of our debt. I am a bit confused on the best course of action to take to help set us up so we can rebuild our credit scores. The majority of the damage has been done as our credit scores are in the 500's with various accounts way behind and in collections. We have many settlement offers on the table, so should I just take those or should we pay the full amount that is owed? I have read that there are implications of taking settlements. I know there are tax implications and the 1099C that can happen. I have also read that if you settle that it can show up on your credit report as a negative, but does that really matter at this point? I am asking these questions from the perspective of rebuilding my score over the upcoming years.
Any help would be appreciated.
Thanks
Any help would be appreciated.
Thanks
I would say take the settlement, get the account paid and closed
I would say take the settlement, get the account paid and closed as soon as possible so you can put it behind you. You can get a Secured credit card after that (make sure they report every payment) and around 6 months later your score will begin to improve and you will be on your way up.
Settled accounts would still look good on your report than delin
Settled accounts would still look good on your report than delinquents and charged-offs. Moreover, once you're settled, your score will start improving. If the accounts are still with the creditors and you can settle by paying in lump-sum (rather than setting up a repayment plan), you can also negotiate for 'pay for delete', which would remove these negative entries from your report.
