Will a Settle Credit Card Debt Plan
Negatively Impact My Credit? 

Settle Credit Card Debt And Done With It!
As it stands, millions of Americans are stretched to the max in unsecured debt; particularly credit card debt. The numbers are indeed staggering. As a country our combined revolving credit debt has almost reached a trillion dollars. Consequently, debtors are seeking solutions to settle credit card debt without filing bankruptcy. One of he most common questions being asked is, “Will settling my credit card accounts negatively impact my FICO score?”

To answer that question you first have to understand the nature of debt settlement. When a company agrees to settle credit card debt, they are agreeing to take less than the actual amount owed to them. For example, if your current balance on your Citibank Mastercard is $12,758.13 and they agree to accept $6380.00 in lieu of the actual balance, they just entered into a debt settlement agreement with you.

Why would any creditor agree to settle credit card debt seeing that they are receiving way less than they are owed? Because their options are usually limited at that point. When a debtor falls behind in their payments, to every creditor, that’s a sign that something ominous may be brewing on the horizon. When they’ve made no payments for three to six months in a row that’s a major red flag. At that point, the account is sent to a collection agency. When they go beyond a year with no payment and the debtor no longer responds to the debt collection calls or dunning letters, they become a prime candidate for a settle credit card debt plan.

Here’s the catch when you go this route; actually there are two. The first is, settling will the debt will negatively impact your credit. Instead of showing the account as, “Paid as agreed” it will show that it was settled. Lenders looking at your credit history will know that you worked out a deal to pay less than what you owed.

However, in reality, your credit was already bad so it really worked out on your behalf that you were able to carve out a deal. Look at it like this, if you have gone six months to a year or more without making a payment, YOUR CREDIT IS BAD! They’re no ifs, ands, or buts about that fact. By working out a settlement, you stop the collection process and can began the process of rebuilding your credit.

The second catch is the IRS! Yes, it’s a crying shame but if you work out a debt settlement, the largest debt collector in the world has made it so that you have to pay taxes on the amount that was settled. In the example with the $6380.00, you would end up paying taxes on $6,378.13. That’s why it’s important to talk with your tax preparer or accountant prior to inking any deal. You don’t want to walk into a settle credit card debt plan until you factor in the taxes.

Joel Marks has been helping people get out of debt and avoid both bankruptcy and foreclosure for over fifteen years. Utilizing savvy debt counseling, debt management programs, Federal laws and a team of attorneys, debt counselors and advisors, he has quietly assisted thousands come from under the heavy burden debt. 

 Source: http://debterasure.com/