Pay Debts or Settle?

[Anonymous]

Hello,

I had previously posted with regards to my charge off accounts, but I'm still confused because everyone seems to say something different. 

1.) I have 8 charge off accounts all from 1.5 years ago (well within the SOL)

2.) None of the 8 credit cards will take a PFD, they are all the original credit agency not CAs

3.) ALL of them will settle for less than the amount owed.

4.) Total debt 26k with 12k paid so far this week.

I wanted to know should I pay the FULL amount owed, or should I settle? Which looks better?

Is there a difference when trying to get a mortgage? 

In the future would I be able to get another credit card with Citibank (one of the Charge Offs) if I settle intead of making full payment?

[Anonymous]

Everyone say something different because every files are not the same and everyone score as well as how thick and thin are your file.  I dont know what to recommend you, but for me I rather settle for less then paid in full. However if you HAVE the cash in handy then I would paid it off in full. Keep in mind that paying settlement or in full doesnt change your score right away. Score will increase when collection are removed, however not everyone are the same. I had my paid in full and some of the score does increase.

[Anonymous]

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@Anonymous wrote:

Everyone say something different because every files are not the same and everyone score as well as how thick and thin are your file.  I dont know what to recommend you, but for me I rather settle for less then paid in full. However if you HAVE the cash in handy then I would paid it off in full. Keep in mind that paying settlement or in full doesnt change your score right away. Score will increase when collection are removed, however not everyone are the same. I had my paid in full and some of the score does increase.

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So you paid everyting in FULL? What did the notation on your credit report say? Paid in full? I think paying in full is the better route but if I settle I could save over 8k, I just want to help improve my credit for the future when I want to take out a mortgage.

[Anonymous]

I paid the small amount in full and the large amount I paid for less...another words pay what ever you can.  A lot of us will try to get PFD first before you paid them a penny. Trying to find everyway to do so.  I regret i didnt do that when I paid them, I wish I found this forum before I paid all my collection.  Now I am having a hard time to get 2 of my collection remove.

when you paid in FULL the remark on your report will say paid in full...if you do settlement it will say settle for less then amount.

[RobertEG]

Whatever amount is accepted by the creditor as acceptance of the debt, if the agreement is that it satisfies the debt, there is no more debt.

So either paying in full or obtaining a settlement for less results in discharge of the debt.

Paying in full is always preferable, as it notifies others that you satisfied the entire amount of debt you obligated, and just as importantly to future creditors, that the prior credito did not take  loss in their dealing with you.

Whenever a creditor accepts a settlement for less than the full amount, it  notifies future creditors that you have a past pattern of not paying your full debt.

If that pattern is repeated with them, they will take a loss.  Potential creditors dont flock to consumers who represent potential loss.

The CRAs accept special comments that state when a debt was settled for less than its full amount, and is never a favorable comment to be recoreded in your credit file.

If a ceditor wont accept a PFD but will accept a settlement, the consumer should attempt to obtain agreement not to report that the debt was settled for less to the CRA,

Without reporting of that special comment, the debt will appear the same in future credit reports as if it had been paid in full.

An additional impact on the consumer is that, when a debt is settled for less than the full amount, the IRS views the difference as "income" to the consumer if it is $600 or more.

They want income taxes paid on the saved difference, and thus creditors are required to notify the IRS whenever debt is satisfied for less than the full amount, and the svings is $600 or more.  That is done via a form 1099c.

So the consumer does not save the entire amount of the settlement.  Uncle gets a cut of that savings.