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Will paying a full amount on a collection bill help better with your credit score than paying a settlement balance?
Wiki User
∙ 14y ago
Assuming you are talking about the FICO score (which is used by virtually all lenders that use a credit score), then no. In fact, FICO does not care whether or not the collection is paid in full, settled for less, or not paid at all! What you might find is that by paying the collection, you update the date of last activity, which could cause your score to go down!
For instance, if your account has been in collections for 6 months, and you finally get the money to pay the company, then your account will be marked as paid. This will also update the date of last activity, which causes the FICO scoring model to see the collections account as brand new, which would cause your score to fall again.
I recommend negotiating (in writing!) an agreement with the collections company to delete the account from any and all credit bureaus (specifically mention the big three: Equifax, Experian, and TransUnion) in order to pay. This is called a "pay for deletion" and you may be able to negotiate this with them, especially if the collections company has violated a law such as the FCRA and you have proof that they have done so (which some collections companies due quite frequently due to the nature of their work).
Ask the knowledgeable people on Credit Boards if you have more questions or are considering a pay for deletion, as they can help you greatly in your journey to pay off your debts, raise your FICO, and become a responsible user of credit once more!
Wiki User
∙ 14y ago
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Should you pay off a credit card that charged off last month and is now in collections the full balance or the settlement amount?
If possible pay the entire amount. A settlement is better than nothing, but paying off the debt is the best option.
Is debt settlement a good choice?
AnswerDebt settlement helps you in reducing your debt amount significantly, the debt settlement company negotiates with your creditors to reduce your debt amount. It is a better option than filing bankruptcy. I took help of Freedom Debt Relief and their debt reduction program helped me in reducing my debt amount.
What is credit card settlement?
Usually, a credit card settlement referes to a situation in which the cardholder can't pay the monthly bill or the reduce the balance. Occassionally, the credit lender will agree to a one-time settlement in which the carholder pays a reduced amount of the balance. A credit card settlement, though, will be reflected on your credit history and is looked upon unfavorably. that is true--but it is better than the company charging off the account. also if you settle for less than 60% they can turn around the next year and send you a 1099 for your taxes to make you declare it as income. SO if you must settle make sure that you don't fall into this.
Will a paid in full collection agency debt look better than a settlement payment on a credit report?
Yes, though both will damage your credit report to some extent.
Should you still pay credit card charge offs or settle the account if they both have the same negative results on your credit report?
The simple answer is..a settlement is an agreement between the creditor and debtor for repayment of a specified amount of the debt, thereby ending the transaction (hopefully). A charge off is the action taken by the creditor after an account has been in default for 180 days. The debt is still owed and the creditor has several options to collect monies owed, including legal remedies such as a lawsuit.So if it is then paid will it show settled on the credit report? And if so is it a big difference between the two as far as credit score goes?If you decide to just ignore the debt, you still owe it to someone. A charge-off with a $0 balance looks much better to potential lenders than a charge-off with a $5000 balance that's still in collections. Plus, the creditor (or any collection agency willing to buy your debt for pennies on the dollar) can come after you in court YEARS later. Here's an example: You owe Sears $4000 on your Sears Card but haven't paid in 8 months. Sears charges the account off and holds the paperwork (they have up to 6 years in most states to come after you). Joe's Collection Agency goes to Sears and buys your account from them for $160. Now, Joe's can call you and offer a settlement for $2000 and still make a boatload of cash. The charge-off shows as "sold/transferred" on your credit report, and you also have a charge-off from Joe's with a $0 balance. What I would do: Talk to the creditor and see if there's a way to settle out of the account and have it removed from your reports. It's often called a "pay for removal". Just make sure you get their promise in writing.The question might be better phrased "Should I pay the balance in full or pay the amount of the settlement offer?Paying the balance is ALWAYS better. Why: To a risk manager, a person who pays their balances in full is a much better risk than a person who does not.A settlement, on the other hand, though necessary for some, is not the preferred choice. Why? Several reasons;1) By definition, a settlement is some amount less than the full balance. Before you pay any settlement, first have IN YOUR HAND a copy of the settlement offer from the firm making the offer. If you do NOT have the hard copy in your hand, it is YOUR word against theirs and the next collection agency will be after you again in a few months for the difference between what you paid and the balance - which will very likely be higher because of added interest & cost of collections. This can haunt a consumer for years.2) Any time you agree to a settlement and the difference between what you paid and what you owed is equal to or greater than $600., the IRS requires the financial institution that "gifted" you the difference must send you a 1099C at year's end listing the amount of that gift. You then count this "gift" as taxable income for the year in which the settlement was paid.3) For those who are concerned about their credit report scores, it is easier to remove a "balance paid in full" from the credit bureau report than it is to remove a "legally settled for less than the full balance".Think about a settlement carefully before you decide. You cannot go back later and pay the difference. I would evaluate the amount of my savings in the settlement against the my tax liability at year's end and the increased cost of interest that I will pay over the next 7.5 years. My credit score is very likely going to drop as a result of my settlement.Decide wisely. Pay it off. You can also try to negotiate the removal of the charge off upon final payment of the balance. Either way you don't want the company to continue to report to your credit report with a balance. The sooner you pay it off the sooner you have a chance of removing it off your credit report.
Should you pay off a credit card that charged off last month and is now in collections the full balance or the settlement amount?
If possible pay the entire amount. A settlement is better than nothing, but paying off the debt is the best option.
How do settlements vs payoffs affect your score?
If the debt is paid in full, it will "look" better then a partial settlement. aA more important issue is that in a settlement, the difference in the amount owed and the settlement amount is taxable.
How do you ask for a settlement on a collection?
Of course you can! You are likely to get a better settlement if the debt is older, the creditor can no longer sue you (check the statute of limitations in your state), the account is close to coming off your credit report (most come off after 7 years), and if you speak to a manager who has the authority to lower the amount.
Is debt settlement a good choice?
AnswerDebt settlement helps you in reducing your debt amount significantly, the debt settlement company negotiates with your creditors to reduce your debt amount. It is a better option than filing bankruptcy. I took help of Freedom Debt Relief and their debt reduction program helped me in reducing my debt amount.
What is credit card settlement?
Usually, a credit card settlement referes to a situation in which the cardholder can't pay the monthly bill or the reduce the balance. Occassionally, the credit lender will agree to a one-time settlement in which the carholder pays a reduced amount of the balance. A credit card settlement, though, will be reflected on your credit history and is looked upon unfavorably. that is true--but it is better than the company charging off the account. also if you settle for less than 60% they can turn around the next year and send you a 1099 for your taxes to make you declare it as income. SO if you must settle make sure that you don't fall into this.
Will a paid in full collection agency debt look better than a settlement payment on a credit report?
Yes, though both will damage your credit report to some extent.
Should you still pay credit card charge offs or settle the account if they both have the same negative results on your credit report?
The simple answer is..a settlement is an agreement between the creditor and debtor for repayment of a specified amount of the debt, thereby ending the transaction (hopefully). A charge off is the action taken by the creditor after an account has been in default for 180 days. The debt is still owed and the creditor has several options to collect monies owed, including legal remedies such as a lawsuit.So if it is then paid will it show settled on the credit report? And if so is it a big difference between the two as far as credit score goes?If you decide to just ignore the debt, you still owe it to someone. A charge-off with a $0 balance looks much better to potential lenders than a charge-off with a $5000 balance that's still in collections. Plus, the creditor (or any collection agency willing to buy your debt for pennies on the dollar) can come after you in court YEARS later. Here's an example: You owe Sears $4000 on your Sears Card but haven't paid in 8 months. Sears charges the account off and holds the paperwork (they have up to 6 years in most states to come after you). Joe's Collection Agency goes to Sears and buys your account from them for $160. Now, Joe's can call you and offer a settlement for $2000 and still make a boatload of cash. The charge-off shows as "sold/transferred" on your credit report, and you also have a charge-off from Joe's with a $0 balance. What I would do: Talk to the creditor and see if there's a way to settle out of the account and have it removed from your reports. It's often called a "pay for removal". Just make sure you get their promise in writing.The question might be better phrased "Should I pay the balance in full or pay the amount of the settlement offer?Paying the balance is ALWAYS better. Why: To a risk manager, a person who pays their balances in full is a much better risk than a person who does not.A settlement, on the other hand, though necessary for some, is not the preferred choice. Why? Several reasons;1) By definition, a settlement is some amount less than the full balance. Before you pay any settlement, first have IN YOUR HAND a copy of the settlement offer from the firm making the offer. If you do NOT have the hard copy in your hand, it is YOUR word against theirs and the next collection agency will be after you again in a few months for the difference between what you paid and the balance - which will very likely be higher because of added interest & cost of collections. This can haunt a consumer for years.2) Any time you agree to a settlement and the difference between what you paid and what you owed is equal to or greater than $600., the IRS requires the financial institution that "gifted" you the difference must send you a 1099C at year's end listing the amount of that gift. You then count this "gift" as taxable income for the year in which the settlement was paid.3) For those who are concerned about their credit report scores, it is easier to remove a "balance paid in full" from the credit bureau report than it is to remove a "legally settled for less than the full balance".Think about a settlement carefully before you decide. You cannot go back later and pay the difference. I would evaluate the amount of my savings in the settlement against the my tax liability at year's end and the increased cost of interest that I will pay over the next 7.5 years. My credit score is very likely going to drop as a result of my settlement.Decide wisely. Pay it off. You can also try to negotiate the removal of the charge off upon final payment of the balance. Either way you don't want the company to continue to report to your credit report with a balance. The sooner you pay it off the sooner you have a chance of removing it off your credit report.
If credit cards have been closed because of late payments is it better to pay them off or negotiate a settlement?
Well, If you have money, pay them off. If you dont have, negotiate with them. FYI..... Usually collection companies negotiate at better rate than original creditors. BUT, a lot of collection companies take your money and then ask for more money. So make sure they send you a written settlement letter and only after that you make a payment to them. Do not trust verbal promises. Absolutely do not. Collection companies try all the tactics to get more and more money out of people's pocket. Be firm and you would definitely get a good settlement. Target 50% :) That is very much doable.
How could an attorney help a person with an IRS tax settlement?
An attorney can help with person with an IRS tax settlement by contacting the IRS, and negotiating the settlement amount. Attorneys who practice in this area of law know the legalities and are better equipped to navigate the IRS tax laws.
I am currently and have been paying faithfully a collection agency 50.00 a month to settle a medical debt. The agency is now threatening to garnish my wages for more. can they do that.?
NO. If you are paying a little at a time they can not garnish wages. The collection agency can not garnish your wages.The only agency that can do that is the Internal Revenue Service. It is better to pay the account in full when settleing a debt it show's on you credit report that you took a settlement. 50.00 a month try that toward your outstanding balance and pay more if you can.
Once in collections for a hospital bill that they denied you financial assitance on can you contact the hospital to negotiate with them again or is there any other way to get bill lowered?
Everything is negotiable. Remember it is always better to pay a balance in fullthan a settlement. Reason: a settlement will show on the respective tradeline on your credit report that the account was "Legally settled for less than the full balance". This sends the message to risk managers that you borrow money but fail to pay all of it back. Contact the hospital. Negotiate your best arrangement. Most hospitals just want their money and will take payments. Try to determine what the insurance company would haveauthorized for payment and use that amount as a basisfor your out of pocket limit. Do not let this go to 3rd party collections. Talk to the primary creditor and make your arrangements with them. A collection agency will be after the balance in full, with little orno "wiggle" room.
Which one is better legendary collection 1 or legendary collection 2?
it depends on your opinionBut personally I think Legendary Collection 2 is better. the packs are better in Legendary Collection 2 and the cards you get too the only reason too get Legendary Collection 1 is for the god cards.
