Each of us lives only now, in this brief instant. The rest has been lived already. So make the most thoughtful choices you can today that will lead to a better future.
Steve's Thought of the Day
Stop drifting and hoping a magic solution will appear. Instead, you can participate in rescuing yourself. Find peace by pursuing facts through trusted advisers and research rather than the blind trust of salespeople trying to sell you something by almost any means necessary.
Steve's Thought of the Day
Make decisions to deal with your debt with logic and facts, not assumptions, and worry about what other people will think. People who judge you will soon be forgotten. Nobody thinks about anyone that much.
Steve's Thought of the Day
The world is nothing but constant change. Your life is only a perception. Choose a way out of debt based on facts, not assumptions. Do what is best for your future because those that judge you will not feed you.
Steve's Thought of the Day
Do you have a greater responsibility to repair your financial past or your financial present and future? Make good choices that allow you to tackle your debt and immediately start building your emergency fund and saving for retirement. Tomorrow will be here before you know it. Lost time is a sin.
Steve's Thought of the Day
There is no sense in wasting a perfectly good financial mistake. Instead, learn from it and do better moving forward. The past is gone. Turn and face the future now.
Steve's Thought of the Day
Those who judge you for past financial mistakes are not your friends. So don't make choices about your future out of fear of what they may think. Instead, make choices based on truth, fact, and what is best for you moving forward from today.
Steve's Thought of the Day
Don't believe everything you think. Challenge your assumptions about getting out of debt. Do what is best for you, not others.
Steve's Thought of the Day
Is it less moral to file bankruptcy or to not take action that leaves you old, broke, hungry, and dependent on others?
Steve's Thought of the Day
If bankruptcy is so bad, why did our Founding Fathers specifically include it in the U.S. Constitution as protection for financial difficulties?
Steve's Thought of the Day
Maybe it is time to read what the Bible really says about bankruptcy instead of listening to the assumptions of others. Throw out your misperceptions and you'll be fine. (And who is stopping you from throwing them out?) - Marcus Aurelius
Stop listening to people that say bankruptcy is a last resort. It is neither first nor last. It is a tool like credit counseling, debt settlement, and others. For the best result, you need to use the right tool for the job.
Steve's Thought of the Day
People that tell you to avoid bankruptcy want to sell you something else are repeating something they heard or do not know what they are talking about. Get the facts and then make your own decision. Don't let an unskilled script-reading commissioned salesperson make life decisions for you.
Steve's Thought of the Day
Debt problems are like fingerprints. No two are alike. A one-size-fits-all solution will give you a one-size-fits-all result. You deserve better.
Steve's Thought of the Day
You are not your debt. Your value, self-esteem, and existence should not be defined by the money troubles you may be facing right now. Debt problems are solved with proper action, not guilt, self-hatred, and disgust.
Steve's Thought of the Day
Debt is nothing more than math wrapped in emotion. The math is easy, the emotional part leads us to do impulsive things. Not the right thing.
Steve's Thought of the Day
What type of money personality do you have? It is important to know. Take my online test now and discover how you unconsciously deal with money, credit, and debt.
Steve's Thought of the Day
How much retirement savings are you willing to throw away by dealing with your old debt instead of preparing for your financial future? Find how much you will lose by making the wrong choice. Use my online debt repayment calculator now.
Steve's Thought of the Day
Does it make more sense to ask for life-altering debt advice from an unskilled and untrained commissioned salesperson in a call center or an experienced debt coach like Damon Day that provides a customized solution for money troubles?
Steve's Thought of the Day
Throw out your misperceptions and you'll be fine. (And who is stopping you from throwing them out?) - Marcus Aurelius
I Want to Settle My Debt But Will My Credit Score Drop? – Mariam
My annual income is 22,000. a year, I have almost 12,000 in debt, i want to debt settlement, because its tooo much Ive been paying my minimum payments and i am current. I want debt relief, on my income I cant pay it back just tooo much, i want to know about how much would they settle, me at if i was to go through with it, and how much would it cost me to file? and how much would my credit score drop if i am at 630 right now? thanks
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3 thoughts on “I Want to Settle My Debt But Will My Credit Score Drop? – Mariam”
If you are going to settle as opposed to internal creditor assistance, DMP, or bankruptcy…Settle directly with your creditors, do not pay a company to do it for you, but be forewarned not all creditors will settle. Make sure you get your settlement in writing before you start paying. As part of your settlement, see if the creditor will report the settlement to the credit reporting agencies as “Paid in full” instead of “Settled in full” ( this can stay on your credit record up to seven years ) and settled in full will look bad for future attempts to get credit. And lastly, be prepared to pay extra taxes…any amount over $600 that the creditor settles (forgives you from paying) will become taxable income – you will either receive a 1099c form, or the creditor will report directly to the IRS – either way, you will end up paying taxes on money that you never see… ( in other words, make sure you do ALL of your research, before you decide to settle)
I appreciate you coming in to offer assistance, but I need to correct a few things. I know dmp programs are naturally bias against debt settlement given that you have to routinely sell against them, and I know debt settlement sales people are naturally bias against your DMP program. I get the whole war between the camps, but it doesn’t help consumers. There are a few statements you made I would like to clarify.
Sometimes it does make sense for a consumer to hire a company to settle the debt. If your philosophy is that a consumer should never hire a company for anything that is possible to do themselves, well then that would mean they should never hire a DMP program either.
Asking for a paid in full designation rarely works, and consumers can ask all they want, but don’t derail a good settlement if the bank refuses to change an accurate report.
When you tell someone they will have to pay taxes, I think it would be fair for you to also mention that they can likely get a waiver if they are insolvent, since many consumers in a settlement scenario likely are. Otherwise it comes across as a half truth scare tactic.
I don’t understand what you mean by “paying taxes on money that you never see?” Of course they saw the money, they spent it on the credit card and they got stuff. If they don’t pay it back, then it is no different than income.
Paying taxes on debt that was forgiven is always cheaper than paying the debt in full with interest, but the way you explain it could make one feel the opposite.
I certainly appreciate your visiting the site and offering an alternative POV and advice from a different perspective.
The paid in full comment is a bit of a misdirection. It doesn’t really matter how the settlement is reflected since the forgiven debt is still going to be shown as a write off.
If you are going to settle as opposed to internal creditor assistance, DMP, or bankruptcy…Settle directly with your creditors, do not pay a company to do it for you, but be forewarned not all creditors will settle. Make sure you get your settlement in writing before you start paying. As part of your settlement, see if the creditor will report the settlement to the credit reporting agencies as “Paid in full” instead of “Settled in full” ( this can stay on your credit record up to seven years ) and settled in full will look bad for future attempts to get credit. And lastly, be prepared to pay extra taxes…any amount over $600 that the creditor settles (forgives you from paying) will become taxable income – you will either receive a 1099c form, or the creditor will report directly to the IRS – either way, you will end up paying taxes on money that you never see…
( in other words, make sure you do ALL of your research, before you decide to settle)
I appreciate you coming in to offer assistance, but I need to correct a few things. I know dmp programs are naturally bias against debt settlement given that you have to routinely sell against them, and I know debt settlement sales people are naturally bias against your DMP program. I get the whole war between the camps, but it doesn’t help consumers. There are a few statements you made I would like to clarify.
Sometimes it does make sense for a consumer to hire a company to settle the debt. If your philosophy is that a consumer should never hire a company for anything that is possible to do themselves, well then that would mean they should never hire a DMP program either.
Asking for a paid in full designation rarely works, and consumers can ask all they want, but don’t derail a good settlement if the bank refuses to change an accurate report.
When you tell someone they will have to pay taxes, I think it would be fair for you to also mention that they can likely get a waiver if they are insolvent, since many consumers in a settlement scenario likely are. Otherwise it comes across as a half truth scare tactic.
I don’t understand what you mean by “paying taxes on money that you never see?” Of course they saw the money, they spent it on the credit card and they got stuff. If they don’t pay it back, then it is no different than income.
Paying taxes on debt that was forgiven is always cheaper than paying the debt in full with interest, but the way you explain it could make one feel the opposite.
Which creditors will not settle?
I certainly appreciate your visiting the site and offering an alternative POV and advice from a different perspective.
The paid in full comment is a bit of a misdirection. It doesn’t really matter how the settlement is reflected since the forgiven debt is still going to be shown as a write off.
The IRS form 982 will negate the tax liability for most people who are unable to pay and settle. http://www.irs.gov/pub/irs-pdf/f982.pdf