Settled for less than value a bad thing?

[Anonymous]

Having been 60 days late on a credit card and struggling with their card services I was offered a deal.  Pay them about 30 cents on the dollar and my debt is gone.  of course the card is closed and my credit will be noted with something like "settled for less than value'.  How bad is this for my credit?  I am starting not to care but since I am very new to this I'd really like to know.   thanks

[DI]

Settling an account certainly will get the creditors off your back and give you a piece of mind.   Any forgivin debt can be turned over to the IRS, and that amount is treated as income.  You may receive a 1099c from the creditor. 

As for as your credit score your overall balances on your credit reports reduces, but a settled account is still very negative.  

Message Edited by DI on 08-26-2009 05:07 PM