About 30mins ago I offered to settle my credit card debt with mbna. The mnba rep told me that if I settle my account for anything less than 100% of the balance it will show up negatively on my credit report. Is this true?

Jrmint:

Yes, it will reflect negatively on your credit report. After all, when you used the credit card, you agreed to pay it all back plus interest. You are now reneging on that agreement.

Further, if the amount that MBNA loses on the settlement is significant (more than $600), they will issue you a Form 1099-C to you and send copies to the IRS and your state tax authority. This means that you will have to report the amount on the Form 1099-C on your 2005 tax return and pay taxes on it.

Thought you should know.