Should I agree to this debt settlement?
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I owe a little more than $1,000 on my credit card to City Bank. This card had already been canceled by City Bank after I stopped making payments 7 months ago. I just got a letter from them with a one time offer to settle the account for $620 in one payment.
Is this a good settlement? Should I take it? What can it do to my credit? I don’t want it to ruin my credit… Thank you.
Take the offer. It’s a great deal!
The offer sounds reasonable for the time & current status of your account. The settlement won’t do anything to your credit, which by now should be pretty bad.
Not making payments for seven months is bad by itself, not to mention that the account is closed and charged-off, which adds another blow to your credit.
Paying your debt off will do nothing to raise your score, but at least will update the balance to $0 and the status to “Settled”. That will look much better than unresolved debt to future creditors.
If you decline the offer, either they will sell it to collection or sue you themselves. Chances are that they will get a judgment against you, and then you’ll end up paying more, further ruining your credit with a new judgment on your report.
The late payment & charge off will remain on your credit report for 7.5 years fro when you first stopped making payment. For the first two years it will devastate your credit, but after that it will have a lesser effect.
Make a photocopy of the agreement. Keep it forever. Pay only with money order or cashier’s check.
Start working on re-establishing credit today. It takes at least two years. Use a secured credit card if you have to.
Good luck
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