Page Section Navigation
Go to: Header
Go to: Utility Navigation
Go to: Primary Navigation
Go to: Content
Go to: Footer
Ask the Experts

Ask The Experts

Are there any downsides to debt negotiation?

I’ve heard a lot about debt negotiation lately. Paying less than I owe sounds great, but I am skeptical. Are there any downsides? -Erik


Debt negotiation is the same as debt settlement. How much the collection agency will settle for depends on your negotiating skills. But you must be aware, if they accept your settlement offer, you must send in the settlement balance immediately. The collection agency will not accept payments on a settlement offer.

Another factor you have to take into consideration on a settlement offer is how it will affect your credit report. When you settle with a creditor, the creditor typically reports that you still have a balance remaining but the account has been "settled in full." This derogatory "settled in full" notation will remain on your credit bureau file for seven years.

There may also be tax implications to a settlement, so please check with an accountant about this issue.

Good luck with your decision,

Ask the Experts

Ask The Experts

If you do not find the answer to your question in the archive, write to the Advice Team today! A member of the Advice Team will personally respond (by email) to your question by offering answers, helpful tips or solutions. This is a free service offered by MMI.

Explore by: