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Does Settling Your Debt for Less Than Claimed Due Hurt Your Credit Score?

We get this question all the time.  I would actually term it one of our most frequently asked questions.  Steve Bucci at Bankrate.com does an excellent job of answering this question and providing some friendly advice on settling your credit card debts and improving your credit score.

http://www.bankrate.com/finance/debt/debt-settlement-hurt-credit-score.aspx

The article points out that the longer a credit card remains unpaid, the more damage to your score.  This we all should know by now.  But then he goes further to explain on of the advantages of settling your debts.  If your account is already seriously past due, having the account being listed as “paid-settled” may actually increase your credit score.  The reason being that the account has gone from and “unpaid” listing to a “paid” listing.  Mr. Bucci also points out that it is important to add some positive accounts that you are paying on time monthly to help boost your score.  As you can imagine, we are particularly fond of his last piece of advice – stay away from debt settlement companies and seek the advice of an attorney to assist you in your debt settlement.  Attorneys are bound by a strict code of ethics and required to put your best interest ahead of their own.  Debt settlement companies?  Who really knows…

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Kevin Fallon McCarthy is the McCarthy Law PLC’s managing attorney and an experienced Phoenix debt attorney. Mr. McCarthy has also worked as general counsel for a large corporation. He has corporate counsel experience in human resource matters, general corporate governance, and union class action litigation.