debt payoff-settle or pay full

Discussion in 'Credit Talk' started by shepco, Jul 3, 2001.

  1. shepco

    shepco New Member

    If a lending agency were to look at my credit rating, is there a difference between an item being 'settled' and an item being shown as 'paid' (in full). I have a opportunity to settle and it could save me appx. $1500 on a $7500 debt. Is it worth $1500 to have it showed as paid in full???
  2. IrishDiva

    IrishDiva Well-Known Member

    There is a difference; the next lender may not look too favorably upon any SIFs, feeling the same thing may happen to them. See if you can negotiate for either deletion or reporting as a paid in full while only paying the amount you have in mind for a settlement. Keep in mind, if the amount you "save" in a SIF is over $600, the company will issue a 1099 and report it as income, and taxes will need to be paid on that amount. Good luck and keep us posted.
  3. river

    river Well-Known Member

    "Paid " and "Settle" would mean the same thing. It depends on what you have plans for, in the near future . It really wouldn't change anything ,as far as, converting it to a positive status. If paid or settle and you go to lender,they may ask you to write a statement to add to file. Good luck!!!!
  4. lbrown59

    lbrown59 Well-Known Member

    Why would you owe income tax on something like this?????????????????=====
  5. IrishDiva

    IrishDiva Well-Known Member

    the government sees that as income since you owed the $ and didn't pay it. Go figure - no one said the tax code made sense! For example, one of the benefits my father receives as an (underpaid) professor is tuition remission for us kids while in undergrad studies and under the age of 26. However, the government now considers that "income" and taxes it! Good grief - that's one of the reason he stays in teaching, certainly not for the $$.

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