Does debt settlement severely affect credit?

Just wanted to say that I do understand that debt settlement will show on the credit report for about 7 years but will one's credit be trashed?

no not trashed forever, i went through a debt settlement company and it did get bad during the process but after it was over about a year later we were getting card offers and my husband purchased a truck 2 years after the program was over. I believe if you pay the debt off as fast as you can put everything into it you possibly can and struggle a little during the program to get it done, once its done if you are responsible with your new debts or current ones like your mortage, utilities. It will return to normal. and the 7 year thing is under if its current or whatever it will say "settled" instead of paid in full. and some companies just still put paid. Its all in how they post it to your report but your credit is probably starting to suffer anyhow due to the high balances, being late on utlilities and other personal loans (which you can include in a debt settlement also if its not secured debt) so he may not know it but his score may be dropping as we speak. Be sure you read up on debt settlement and how it works so you are clear as to the process and what to expect and so forth. Good luck!

the hit on your credit will be temporary.nothing compared to BK.

Thanks . . . give's me hope that he'll consider it.

Even though he has two accounts with BOA, I'm assuming each account has to be dealt with individually?

Also, Chase is the other cc and we use chase as our bank . . . do we have to worry about them going after money in there monthly that we use for mortgage and other bills?

Thanks so much guys! Love this forum!

Even if you keep current with all your payments, your credit score can drop dramatically if you have a bad debt-to-income ratio, or if many of your cards are charged to the limit. And if you continue to keep current, with cards that are charged to the max, your score will continue to drop and remain low as long as you are paying on the cards, for years and years because chances are you are paying mostly just interest with very little reduction in the balance. With a settlement your score will drop but after a few years it will rebound again.

How do they know what your income is if you haven't given it to them? Or if you did when the credit card was opened, it was like 5 or 7 years ago and no longer accurate?

They don't know it's no longer accurate. Most likely it was a lower figure than what you're making now, which is not good if your debt is growing. And they can certainly tell by your credit reports if your debt is growing, without the income to pay it off, rather than keeping it about the same or paying it down. The credit card industry is in a panic right now. People that have never been late on payments or ever even had discussions with their creditors are finding their interest rates being raised, their limits lowered, or their accounts closed altogether if it looks on paper that they are becoming a risk.

Your credit score has nothing to do with income. Debt-to-income ratio is determined by a lender when you are trying top get a loan.

I think what SusieQ meant was bad debt-to-credit ratio..meaning you've borrowed all the credit given to you. Youfe maxed out

Yes, sorry, I was thinking about two things at the same time and got my wires crossed. Thanks for correcting me.

Makes a lot of sense. Thanks SusieQ! You have all really put things in perspective for me. I'm going to discuss this with my husband - if he can first just keep an open mind to the idea. Wish me luck!

stenogirl5, keep at it, and consider all options before making a decision. debt settlement of some kind is an option, which you can work out to 2 or 3 years. Or, you could work to settle or discharge it yourself.
Once you've dealt with the cards, you CAN repair/restore your credit. It will take 2-3 years on your own, and the marks won't leave your report for 6 years +. If you contact NFCE (national foundation for credit excellence) you can talk with a group that is successful (guaranteed) at fixing credit. My company uses them routinely, so if credit is a concern of yours, I'd be glad to tell you more about what they do/have done.

I think this is something that most people dont understand and i myself didnt either at the time. Thanks for pointing susieq, I didnt realize that at the time even though I was keeping up with my payments my score was steadily dropping. No new charges, but i was making minimum payments (before i got so deep i couldnt do that anymore) and all my cards were close to being maxed. My new problem is now i am current and i was well below all my limits, but i only have 3 cards and 2 of them decided to lower my limits for no reason by be (because of the economic crisis). So now I am sure my credit is starting to suffer again even though im current and all of that. 1 completely cancelled so now i get a bill every month and no available credit. (they went out of business) it stinks when you play by the rules you still get burned