Negotiate a Debt Settlement - Debt Settlement?

Debt Settlement?

I've been in a credit counselling service for one year now and I am saving money on the side. I've been recently offered a settelment on a sizeable debt I have. It's 60% what I owe the company but it's through a collection agency. I know that by taking the settlement, the balance will go on my income at tax time, but I figure that the taxes I'll pay on it will be a lot less than what I would pay if I continue with the payment plan I have been using. Are there any negatives to taking such a settlement? Can I ask that they consider that I paid it in full on my credit report? If I can manage the three payments, why shouldn't I take the offer? Sorry, I meant 60% OFF what I owe!!

Public Comments

The debt management place works for you - keep that in mind. By all means, if you can settle, do so - then when the debt is about to be paid off, tell the mgmt to take it off of your list. They should not charge you for being able to take care of your own debt. I do know they don't like you talking to your original creditors because they like getting money from them for setting up your payments - but you're doing the right thing - pay off that debt.
That doesn't make sense. Your credit counseling agency has taken over these accounts. Secondly, I think 60% is waaaaay to much to pay. If you were to pay it off I would offer not even half that much and ask them to put in writing that they will expunge the account from your credit history w/in 30 days.
If you have the option to settle for much less and are happy with the amount then settle. Get the amount in writing as well as an agreement to report it as paid as agreed for your credit report. if they tell you they cant do that they are lying they are the ones that report it as bad they are the ones who can change it. as for having to claim the wrote off amount on your taxes your right. Just figure on $100 per $500 worth that you are having to claim another words if you have to claim $2500 figure on paying $500 for the tax end of it. GOOD LUCK
You already are aware of the main negative, in that you will likely receive a 1099 for the forgiven balance, and pay taxes on that amount. If they don't send the 1099, you may not have to worry about that (though your conscience might get you anyway). If they're offering you 60%, they'll likely take 50%, maybe less. So try to hammer it down a bit more. Don't send one single penny until you have the entire agreement in writing, in your hands. They will screw you and try to collect the whole balance later if you do. And don't just ask them to show it as paid. Ask them to permanently remove it from your credit report. They may refuse. If so, dispute it with the credit bureaus after it's paid. There's ALWAYS something inaccurate about the reporting, and the collection agency will likely not respond to the dispute on a paid account, so there's a good chance you can get it deleted permanently. Last word of advice: Do not accept the offer unless you are 100% certain you can meet the payment schedule. Miss one payment by 1 day, and the whole thing is off. That'd really suck if that was your 3rd payment.
Going with a debt settlement is going to hurt your credit. I f you can make the payment, I would just do it yourself.
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