I received a letter from a collection agency for an unpaid credit card balance(I know, I know, but that belongs in the “MPSIMS - I’m such an idiot thread”). Anyways, one of the options on the letter is to pay by “Settlement”. Meaning, I only pay 53% of the balance with no further obligation and it will reflect a settlement status on my credit report.
I could also pay the full amount in 10% increments over 10 months. I could afford to pay the 53% in two months and be done with it but how will this look to prospective creditors in the future? I realize my credit is pretty much in the shitter for a while anyway, so why pay the full amount?
There is one thing I can guarantee that will happen as a result of taking the settlement:
Anyone reading the report will see that the creditor in question had so little confidence in your ability (or desire) to repay the full amount that they were willing to take half up front.
I’m not a credit counselor, just a (former) debtor like you. The folks at Genus (www.genus.org - a nonprofit) are good about answering these questions specifically. My advice would be, if you can afford to pay half in two months, pay all of it in four months, and get that “paid in full” notation for this creditor and all others. You’re not in an emergency situation and they will work with you if you demonstrate your intent to pay the full amount. Once you’ve paid, be sure to get written proof of that from the creditor, so you can clear up any potential credit reporting problems.