We Are Pulling Out of Our Debt Settlement Program. We Settled Our Debts on Our Own. – Jennifer

“Dear Steve,

My husband signed up with a debt settlement program but we are pulling out after only 4 months in the program and have negotiated our debt with our creditors directly. The settlements are done…by me, not our debt settlement company.

Is it better from a credit perspective to settle on your own debt with your creditor, or since my husband signed up and then pulled our before they did anything will that also ruin our credit and/or show up on our credit report?

Is this as bad or worse than bankruptcy, or better? I’m very confused! The main thing is that we have to improve our credit and i need to know how to do it and what recourse I will have with the credit bureaus after the “fallout”. Thank you!


Dear Jennifer,

Working with a debt settlement company seemingly has the same negative effect as if you did it yourself. If you were behind on your accounts and settled them for less than the full amount, that will all appear on your credit report for seven years no matter who settled the accounts.

You have no recourse with the credit bureaus other than to dispute any debt that is not reported correctly or does not or did not belong to you. Any debt reported as being delinquent and paid off for less than the full balance sounds like that would be a factual statement and not removed.

At this point it really does not matter which approach is seen better since the settlements are done.

In order to rebuild your credit, see How to Rebuild Your Credit After Bankruptcy. It’s the same process.

Please update me on your progress by

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

3 thoughts on “We Are Pulling Out of Our Debt Settlement Program. We Settled Our Debts on Our Own. – Jennifer”

  1. Hi Jennifer,

    I agree with Steve here that it does not matter who settles your debt.A bad credit record and/or history has been created when you starting defaulting with your bills.

    What you need to concentrate on right is how rebuild your credit record back from ground zero to where you want it.Its going to take time but with sheer determination and plan,you will surely achieve it

  2. Is settling the debts directly with the credit card companies the same as bankruptcy in the eyes of the credit bureaus/creditors?? I know that both appear on the credit report for 7 years. Thanks!


  3. Steve,
    Thanks for the answer, but what I really need to know is that just by virtue of the fact that we signed up with the settlement company but pulled out before they did anything at all…will that also end up on our credit report in addition to the fact that we settled the accounts ourselves? Does that make sense? In other words, we signed up for something that I’m told is reported to the credit bureaus (in the form of a settlement company services) and never used it (3rd party collections / debt settlement company), then pulled out before they actually did anything to negotiate our debt. Will that specifically report negatively on our credit report?

    Also, after the “dust settles” on our settlements in a few months will it improve or go down since we have settled? Thanks!



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