Credit card debt gets worse when they are charged off and transferred to collections!
There are a few things that you should keep in mind when you plan to settle credit card debts, that are currently handled by a collection agency!
Remember, your credit score has already been affected when your creditor wrote the debt off as delinquent! Your score can only get worse, if you delay sorting it out with the collection agency.
So, once a credit card debt goes to collections, it’s now the agency’s duty to report to the credit bureaus about your delinquency. And, your credit score is typically based on what’s getting displayed on the credit reports, issued by the bureaus.
The collection agency will decide whether or not to report your current debt status to the credit bureaus. Till your status gets updated with a credit bureau, you have the game on your side. In fact, you can even make sure that this collection account never gets reported!
What you do is, you enter into a settlement offer with the collection agency.
Is credit card debt settlement easy? How do you do it?
If you are in a pretty messed up situation, where your credit score has fallen to sea level, your expenses have surpassed your income, your debt amounts are in no place to be paid off, then we believe you should go for credit card debt settlement!
Moreover, if your debts are passed onto collections, then a settlement is the best option!
Because, it is far better to settle and get rid of the collection account once and for all, than dragging it for long with balance transfer or other ways to pay off credit card debt!
The credit card settlement process is pretty easy if you work with a settlement company. You might get to read and hear in many places that these debt settlement companies are not worth it, as many are frauds and some don’t have a smart reputation.
But, trust is God! You got to have faith and patience!
The settlement companies take time in handling debts, but they are really helpful, if you can select a settlement company that has a good history with settling credit card debt. Experience speaks a lot while trying to settle debts, especially for the accounts handled by debt collectors.
You can definitely do it yourself – the credit card debt settlement, but collectors are no easy game!
They will try to harass you and pull back the owed amounts by all the means possible. At times it doesn’t go unheard that these collectors use manpower and gunpowder to force the debtors to pay their debts!
How debt settlement affects your credit
See man, to tell you the truth, any form of paying off debt that doesn’t involve the normal schedule of payment will hurt your score, do whatever you may want!
But we can truly try the best, to cause as little harm as possible to the credit score, while doing settlement.
The credit card settlement process is not over, even after the debts get settled. The next step is probably the most vital one.
The collectors should report the account as ‘paid in full’ or anything like that, to the credit bureaus. If the account gets displayed as ‘settled’ or ‘discharged on forgiveness’, and so on, then your credit score will fall heavily. This is a negative mark on your credit report.
I believe the trick is to influence the collectors to display the account as rightfully paid, or there’s no way to help your credit score increase.And, playing this trick is no simple water!!
So, take help of lawyers and settlement companies to accomplish your debt goals!
Still when you are doing a lump sum settlement for credit cards, you actually should not worry about credit scores much. A lump sum settlement is never a favourable condition for creditors. They will always try to avenge it, by smudging the credit reports, as that’s something in their court.
A credit card lump sum settlement can never be good for credit score or your credit history.
Usually we always ask debtors to try to pay off credit card bills on time, to avoid later complications. But, what to do!! Things get so messy at times, that a credit card lump sum settlement is the only viable option for us.
Finally comes the question, can paying off or settling debts in collections help credit?
A good credit card debt settlement done by professionals in the best procedure, can help your credit score to increase!
That’s because it has two aspects. One that I have already discussed above, is to get the collector or creditor send a good status to the credit bureau, once the settlement is over.
The second is, upon you, where you will become a responsible credit user in the future. Now that the debts are settled, and you are freed of the debt burden, you should focus on building your credit score once again. This might sound impractical and hypothetical, but it’s true!
So, next time onwards, take this precious suggestion! Pay debts on time.
If you can’t pay it off in full, then settle it, no matter in what position the debt is! It doesn’t really matter whether it’s with the creditor or a collector, and so! Just get rid of it, before it’s too late.
One way, your scores are gonna drop because you couldn’t pay in time! Hence, don’t waste anymore time!
First deal with the debt, and then you can plan to mend the broken credit score, by learning from your past mistakes.