Hello, I Am about 14,000 dollars in debt to about 12 different creditors. Only one creditor is a credit card, the rest is everything from a gym pass to phone and medical bills. If I settle I can lower the total debt to about 10,000 dollars. Most of these accounts are more than two years old, and will accept some kind of settlement, however the collection agencies will accept a much lower payment. My question has two parts...

1. Is settling rather than paying the entire amount going to hurt my credit any more than it already has?

2. Is settling with a collection agency rather than the original creditor going to hurt my credit any more than it already has? And will this cause more problems than it is worth? (I.E. clearing the charge off's and open accounts once paid off.)

Any help will be so much appreciated, thanks to everyone on this site.

Johnny

Yes settling will hurt your credit more. And when it comes to the collection agencies, I am not entirely sure.

I thought about the fact that the original creditor hired the collection agency to get the money to pay off the debt. I would think that it would be similar to taking a settlement.

I will do some more research and try to get back here for ya!

I would say that after two years of non-payment, your credit has taken most of the hit already that it is likely to take.

If you hope to have these items removed from your credit, that would be part of the negotiation process with the debtor. If you negotiate with a credit collector, he can only delete his entries, but if you negotiate with the original debtor, he can delete the entire account.

Disputing the accounts once they are paid off may delete them if the company no longer wishes to verify that they were accurate, but often they will reconfirm the account because that is the whole purpose of being a reporting member.

Show that you are now in control of your finances by paying everything on time from now on. Use on-line payments to attack balances quickly or set up automatic payments wherever you can. As you create a new history, the old history will begin to be a lower part of the total score.

Thank you both for your input. This information has helped me figure out and schedule which companies to pay off first and how to negotiate. thanks again. johnny

do not forget the taxes, when you settle 14000 for 10000, that means tax wise an income of 4000

Yes, they could send you an IRS statement. Depending on your tax bracket and other circumstances, this could have a positive or negative effect on your tax filing. The factors include whether or not you are eligible for the Earned income tax credit and where you are on that scale, and other things like expenses you may have from things like self employment or unreimbursed job expenses. Seek out advice from a tax professional.