Debt Settlement and Credit Rating - The Bills.com Blog
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Debt Settlement and Credit Rating
Question: If I get help to settle my debt, do I lose my credit card?
Answer: If you decide to hire a debt negotiation or debt settlement firm, the firm will ask you to close your credit card accounts. The settlement firm will not be able to settle your debts if you continue using and paying on the account.
Bill is friends with the good folks at Freedom Debt Relief. They are a good organization and are members of the Better Business Bureaus. They can be reached at:
1-800-544-7211
Freedom Debt Relief
If you want to pursue other options and companies, here is a representative list of debt resolution companies:
www.debtok.com
www.newdebtrelief.com
www.freedomdebtrelief.com
www.debtdiet.com
www.careonecredit.com
www.debtresolutionpartners.com
href="http://www.usdebtpartners.com" target="_blank">www.usdebtpartners.com
www.freedomdebtreduction.com
www.freedomdebtreliefusa.com
Generally, I would make sure that any firm you choose is a member of the Better Business Bureau and get a sense for the quality of the organization (www.bbb.org).
Also, most credit card companies will not settle with debtors until the account is around six months delinquent. This means that you must stop paying your creditors each month in order for the settlement company to obtain a settlement. No credit card company will allow a cardholder to keep an account open after not paying
for six months. Nor will a card company allow a user to continue to use an account after agreeing to accept a settlement amount to pay off the balance of the account. If you are interested in debt settlement, I encourage you to visit the Bills.com Debt Relief Resources page at http://www.bills.com/debt_relief/
You can also enter your contact information in the Bills.com Savings Center, which you will find at the top of the web page, and we will have one of our pre-screened debt settlement providers contact you to discuss your options. I hope this information helps you Find. Learn. Save.
Good luck,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Betty on Thursday 12th April 2007 07:33
How does settling a credit card hurt your credit? How long is it held against you?
2. Posted by Mike Birin on Thursday 12th April 2007 09:00
Settling a debt will negatively impact your credit rating, relative to paying it off in full... but it is much better than having a delinquent debt that is unpaid.
3. Posted by Steve B on Monday 21st May 2007 08:39
Debt settlement can hurt your credit for a couple of years, however it does at the same time help your credit go back up. Because once you settle out your debts your debt to credit limit ratio is going to look much better and that makes up for about 30% of you FICO score.
4. Posted by Debbie on Wednesday 26th September 2007 08:11
Currently I have a credit rating of 760; however, I also have >27,000 in credit card debt. It seems I have been paying on this for years with little relief. I am not behind on any bills yet I am interested in credit card settlement to get this off my back. How big of a "hit" would my credit rating take and would it be worth it?
5. Posted by Nate on Thursday 27th September 2007 17:13
The "hit" will be substantial. The impact will last atleast for the term of the program (2 - 3 years) if not longer. You should opt for settlement only if you are able to abstain from using your credit for any reason for that amount of time.
6. Posted by John on Wednesday 14th November 2007 08:48
I'm interested in debt settlement yet wish to retain one credit card that has a zero balance. Am I able to do this or do I have to enter all credit cards into the agreement?
7. Posted by brads on Wednesday 14th November 2007 11:14
You should be able to do this, since the balance will show as zero on your credit report (your creditors won't be aware that you are carrying credit when they go to settle). You will need to confirm this with your debt settlement company provider. I know that Freedom Debt Relief (www.freedomdebtrelief.com) allows this, as long as the card stays below $500. Good luck.
8. Posted by mike amstutz on Monday 7th April 2008 11:58
I have 26,000 in credit card debt. I want to pay it off but am struggling big time. Should I do debt settlement? I have a 707 FICO and have never ever been late, but I am stressed to the max. My wife is unaware of my debt and it is going to cause personal problems. Should I start saving for settlement payments? Or what?
9. Posted by Bill on Monday 7th April 2008 12:27
There is limited information in your question for me to recommend a solution for you. I suggest that you call our friends at Freedom Debt Relief (www.freedomdebtrelief.com, 1-800-544-7211). They offer a free no obligation evaluation and will be able to tell you if settlement is the right option for you based on your situation.
10. Posted by Adrian on Wednesday 14th May 2008 07:07
I have 7,000 in credit card debt, if I do a debt settlement, and my credit score is already very low is it a good idea to do this. I'm also looking to buy a new home in about 1 1/2 year will it affect me when I try to buy a home, and will it prevent me from being approved for another card in the future.
11. Posted by Bill on Wednesday 14th May 2008 10:02
Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. Therefore, you will have to give it atleast 2 years after the point that you finish the settlement program in order to apply for a mortgage to buy a new home. Debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving lots of money.