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I guess if your credit is already fucked and you don't mind it staying that way for another 10 years, you could just ignore it.
But if you're willing to settle with them, why not go ahead and not burn your bridges?
going the settlement route will add a black mark to your credit report. Going the collections route will add a bigger black mark to your credit report. But if your credit report is going to look like [email protected]!t for the next 10 years anyhow, I don't know if the difference would matter much in the long run.
Wouldn't a settlement or a "paid as agreed" look better than a complete loss?
A settlement is not paid as agreed. Paid as agreed means that you fulfilled your full obligation (i.e. $3500) and on time. A settlement means that the company decided they couldn't get their full amount and is settling for whatever they can get. The big difference is a settlement is an immediate black mark on your record and shows you are somewhat competent while a default will go to collections and shows a total loss (unless you are already settling with collections and not the original company). Both will lower your credit score and both look bad to future lenders.
I'd say just pay it off in full. If you're willing to pay 2g, you might as well pay the extra 1.5g. That isn't a ton of money and you can always choose to start to fix your credit. The sooner you start, the easier it will be. If you wanted to fix your credit, financial advisers are great to get you on the right path but avoid "credit counselors" since many of them are scams.
^^^ It may be different in the U.S., but in Canada, a credit counsellor can arrange what is called a "consumer proposal". They will examine all your debts, your income and obligations, and then contact ALL your creditors to arrange a monthly payment...usually based on less than the full amount owed. It's better than bankruptcy and will simplify things for you. It's an option you can at least check into. You have to keep your eyes on the big picture...what got you here, and what changes you need to make going forward. Get some professional advice.
hb
^^^ America also has a similar 'credit counseling' setup. However, from a black mark standpoint, accounts appearing on a credit report as being under the jurisdiction of a credit counselor and/or 'settled' at lower balances and lower interest rates by a credit counselor are basically viewed by lenders as the equivalent of the person having filed for bankruptcy.
Credit counselors don't have any more leeway than you do. They do have time and some bargaining "tricks" they've learned. If its one CC for $3,500, I'd pay it off as much as possible and as quickly as possible. Once that is done, cutey, you will have some cashflow available to rebuild your credit from different angles.
Do the right thing.