Dealing with credit card debt is never a fun thing to do. Whether it is small debt from a couple of missed payments or debt that has accrued over time, it is something that can plague you and damage your credit score.
Luckily, there are options available to deal with different types of credit card debt, but it is important to know which will work best in keeping your credit score from taking too much damage.
For instance, let us say you are behind on a credit card over three months. With it already damaging your credit report, two possible options available for you are to either make a settlement or to pay off the debt straight up. So which option is better?
It goes without saying that making a settlement is definitely better than not paying at all, but because it carries a negative status it is not better than paying off your debt in full. When you settle a debt it means you have negotiated with the lender to pay less than the full amount owed as a last payment on the account. Anytime you do not pay the full amount it will have a negative impact on your credit score.
Making a settlement, or a settled account will leave that status on your credit report for seven years, starting from the original delinquency date of the account. If your account was never late then it will start on the date it was settled.
If you choose the option to pay your debt in full then your credit report would show the status “paid in full.” This translates to closing your account in good standing, and this status will appear on your credit report for up to 10 years.
While that does not seem appealing at first glance, having a closed account with a status of paid in full tells future potential lenders that you pay your bills in full. This is much better than a settlement where you do not pay the full amount.
Experienced Bankruptcy Attorney Helps Clients Struggling With Debt in Medford, Moorestown, and Mt. Laurel, New Jersey
If you are on the fence about what the correct route is to take in dealing with your credit card debt then contacting an experienced bankruptcy lawyer would help. The Law Office of Joel R. Spivack Esq. has the expertise to help you with your debt relief. For a free consultation contact our office today at 856-488-1200.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.