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    cantamag's Avatar
    cantamag Posts: 1, Reputation: 1
    New Member
     
    #1

    Feb 8, 2007, 10:29 AM
    Credit rating: Settled vs Paid
    A few years ago, we ren into financial hardship. I contacted one of our credit card companies to ask them to work out a payment arrangement with me. They refused because my acount was "in good standing". Well, we defaulted on the payments as I warned them may happen. They rapidly inflated the interest and they have since marked the account aare s a charge off.
    In 2006, I received suit papers from an attorney for the cc compan The papers claimed and even more inflated balance due.
    We are in the process of negotiating a payment as I am not opposed to paying what I actually owe but they are still well above that number in their proposal. Part of my offering all alogn has been that the account must be marked paid n full and the deragatory removed from my credit report. We are near an agreement but at the last minute their attorney stated they will only mark the account "settled" for the agreed figure and not paid in full.
    My questions are:
    What is the different impacts on my credit report for settled vs paid in full?
    I read online that if an account is settled the company can send me a 1099 alleging "income" from the difference. Is this true?

    I am very newar closing this out but need help in deciding on the importance of this terminology. I need to re establish my credit score as high as possible.

    Help ASAP is greatly appreciated.
    krittengirl's Avatar
    krittengirl Posts: 63, Reputation: 14
    Junior Member
     
    #2

    Apr 15, 2007, 10:12 PM
    Quote Originally Posted by cantamag
    A few years ago, we ren into financial hardship. I contacted one of our credit card companies to ask them to work out a payment arrangement with me. They refused because my acount was "in good standing". Well, we defaulted on the payments as I warned them may happen. They rapidly inflated the interest and they have since marked the account aare s a charge off.
    In 2006, I received suit papers from an attorney for the cc compan The papers claimed and even more inflated balance due.
    We are in the process of negotiating a payment as I am not opposed to paying what I actually owe but they are still well above that number in their proposal. Part of my offering all alogn has been that the account must be marked paid n full and the deragatory removed from my credit report. We are near an agreement but at the last minute their attorney stated they will only mark the account "settled" for the agreed figure and not paid in full.
    My questions are:
    What is the different impacts on my credit report for settled vs paid in full?
    I read online that if an account is settled the company can send me a 1099 alleging "income" from the difference. Is this true?

    I am very newar closing this out but need help in deciding on the importance of this terminology. I need to re establish my credit score as high as possible.

    Help ASAP is greatly appreciated.
    Remember first of all that "settled" is better than "charge off" . That said, ask the company if they will be sending you a 1099. If that is not the practice in their company then definitely go along with the "settled" account. If they do consider the difference as income, then figure based on your tax rate how much you would have to pay in taxes on the amount. Then weigh the pro's and cons of paying vs. chancing that the company does not settle. Once it is "settled", if it is not reported on your credit reports in a quick manner you can dispute the items (real easy) and you will even have a chance that the creditor will not respond and then the item will be deleted from your credit account forever!

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