Is cash settlement a bad choice?
Is cash settlement a bad choose?
After the recent economic meltdown in the US, people have incurred
insurmountable amount of debt. In such situation, these debt stricken
consumers enroll in a debt settlement program. But remember that debt
settlement can adversely affect you in some cases. Therefore, you should be
aware of all the facts before you plan to negotiate with a creditor for a cash
settlement.
How it affect your credit score?
Your credit score drops by 45 to 125 points if you opt for debt settlement
process. The creditors will report the account as “settle in full” instead
of “paid in full” to the credit bureau and it will be displayed on your credit
report to warn your potential lenders that you have settled your previous
account. This information will blemish your credit report for 7 years and you
might face problem getting loan in future with favorable terms.
Forgiven debt is taxable income:
Remember that you are liable to pay taxes on the forgiven debt. If you have
a forgiven debt more than $600 then you are liable to pay taxes on it.
Facts about debt settlement process:
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