what does a settlement actually mean?

[willpower102]

What is the name of your state? TN

I've been reading up on debts for a couple hours and even searched but i still haven't found a good description of the in's and out's of a settled account.

For example, i have this account with verizon for 1133$. I settled with them (at 907$ i guess) leaving 206 remaining. I understand I can't ever get a verizon account again until that's paid off, but what is my transunion credit report telling me? Pay status: charged off as bad debt, Remark: profit and loss writeoff.

Can this account pop up in the future under another debt collection agency asking me to pay it? Also, why do both settled and FULLY paid accounts sit in the adverse accounts section? Are these actively hurting my credit even thought they are paid in full?

Here's another strange one to me. My family gave me 2k for pay off these debts when i was younger. We set it up in a secured loan from my bank where, if i didn't pay it, then the money to cover was physically at the bank. For whatever reason, i stopped paying on the account and now it's showing up as $2k loan, balance of #0 and Pay Status: charged off as bad debt. I don't understand this since they have their money.

[TN_AtomicLaw]

Settled In Full vs. Paid In Full

If you settle an account, the creditor agrees to accept less than the full balance and will then consider the account closed. Over and done with. If you do settle an account for less than the full balance, BE SURE TO GET A LETTER FROM THE CREDITOR VERIFYING THAT THE ACCOUNT HAS BEEN SETTLED IN FULL! DO NOT throw away this letter. I cannot stress this enough.

The account will then show up on your credit report as "Settled" or "Settlement." It's not as good as a "Paid in full" mark on your credit report, but it's not nearly as bad as a "charged off as bad debt" mark.

There are times, however, when settled accounts slip through the cracks. Creditors will farm out their delinquent accounts to collection agencies and sometimes the remaining balances on settled accounts will be lumped in there - for whatever reason. It shouldn't happen, but it does.

That's where your Settlement Confirmation letter comes in to play. You will need to provide the collection agency with a copy of the letter (keep your original) and then they'll have to hash it out with the original creditor or previous agency with whom you settled.

As far as settled and paid in full accounts hurting your credit report, what hurts is the history of the account. Was it paid off long after it was due? Did the account spend a long time in collections? Did you pay late often? If so, then it will reflect negatively on your report, even though the account is paid. An account will stay on your credit report for up to 10 years - even if it's paid off.

Regarding the secured loan - it's still a loan. If you didn't pay on time as agreed and the bank had to cover it with the deposit from your family, then technically you defaulted on the loan.

To rebuild your credit, make your payments on time and as agreed - each and every time. No late payments, no short payments. Period.

[willpower102]

thanks. I forgot i even posted this. Some people on the board recommended reading on [url]http://creditboards.com/forums[/url] for more in depth credit information. That site very comprehensive information on rebuilding credit. Apparently you should never sit back and let paid in full and settled accounts chip away at your bad school since they can be easily removed with a request. I understand to make payments on time. But that doesn't help the past.

[willpower102]

I also wanted to clarify for anyone passing by here that not all accounts stay on your report for "up to 10 years" as stated above. Only bankruptcies and positive tradelines. Any sort of negative tradeline on your account will only show up for a maximum of seven years. (i've learned a lot since posting the original question )

[tarheel247]

[url]http://www.debt-consolidation-credit-repair-service.com/forums[/url] is the best site to help with credit issues..

[willpower102]

hey thanks! i saw that site before but couldn't find the link.