AI Legalese Decoder: How It Can Help You Decide Whether to Settle a Debt or Pay in Full
- December 3, 2023
- Posted by: legaleseblogger
- Category: Related News
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How AI Legalese Decoder can help with the situation
Subject: Need Advice on Repaying Old Debt
Hello Everyone,
I hope you’re doing well. I am reaching out for some advice regarding a debt that I acquired from a line of credit I took out approximately 3-4 years ago. The reason I initially took out the loan was to assist a close friend who was going through financial hardship at the time. In hindsight, I realize that this may not have been the wisest decision, given the circumstances.
Unfortunately, due to my own financial obligations, I was unable to repay the debt until now. During this time, I was focused on completing my college education without accumulating any additional debt, which I was successfully able to achieve.
Currently, the outstanding debt amounts to a little over $2,200, and I have managed to save up around $1,500. I am uncertain whether I should wait and pay off the entire debt in full or if I should try to negotiate a settlement for the remaining balance. I am inquiring about the potential long-term implications of each option, particularly in terms of how they may impact my credit score or financial wellbeing moving forward.
I would greatly appreciate any guidance or advice on these matters. I am particularly interested in exploring the possibility of reaching a settlement for less than the full amount, given that the original loan was for a significantly lower sum. However, I am hesitant to proceed without understanding the potential repercussions.
If anyone has knowledge or experience in this area and would be willing to offer their insights, I would be very grateful for your input. Thank you for taking the time to read this and for any assistance you are able to provide.
How AI Legalese Decoder can help with the situation:
The AI Legalese Decoder can be immensely helpful in understanding the legal language and implications surrounding debt settlement and credit scores. By utilizing this tool, individuals can gain a clearer understanding of the various legal terms and complex language often found within debt agreements and credit-related documents. This knowledge can empower individuals to make more informed decisions regarding their financial obligations, as well as potentially negotiate more favorable terms with creditors. Additionally, the AI Legalese Decoder can provide insights into relevant laws and regulations that may impact the situation, enabling individuals to navigate their debt repayment with greater confidence and clarity.
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****** just grabbed a
Decade of mortgage experience here: I had people settle their debt instead of paying the full balance all of the time. Make sure you get the final settlement amount in writing and that they will mark your account as paid in full (you can have verbiage of settlement with the paid in full text) but you donÔÇÖt want it to say
ÔÇ£Paid/Closed
Balance: $700ÔÇØ
As long as you have those 2 things, settling it will not hurt you at all past the damage the collection has already done.
First off, it is old debt so I am going to assume that this has been sold by the Company to a debt collection service. It was $995 originally, they sold it for a good bit less than that to the Debt Collection company.
The older the debt the less they sell for. So who ever has bought this bought it for less than $995. So ***Hell would Freeze over before I paid $2,200 on a $995 debt.*** The damage to your credit is done so don’t let them scare you.
I can’t remember the details but Dave Ramsey does a good job explaining all this and you can probably find info from him on dealing with these old debt. Odds are good if you follow his advice you can settle it for less the $995.
It takes some effort and a few phone calls but there is a RIGHT WAY and a WRONG WAY to do it. Again, I don’t remember all the details so you need to look it up. But I do remember his saying you need something in writing showing this is settled and that you should never throw it away because these guys have been known to sell debt that they collected on.
So do a little homework and don’t act to fast.
A quick search found this. I am sure there is more out there.
[https://www.daveramsey.com/blog/how-to-deal-with-debt-collectors](https://www.daveramsey.com/blog/how-to-deal-with-debt-collectors)
Dw about your credit score. It sounds like itÔÇÖs in collections? So donÔÇÖt worry. Do not pay a penny until you Have a written agreement. And do not give them access to pull money from your account. Pay by money order or check but not ACH
Maybe this is a dumb question, but maybe I’m not the only one wondering this…
What’s the difference between settling for $2,200 and paying off in full (which I take would also be $2,200)? Are there any sort of payment plans or anything? I feel like I’m missing something here, although I’m sure someone else will come around who’s more familiar with this stuff.
Contact them and ask for a payoff amount. Make sure they understand itÔÇÖs ÔÇ£pay for delete.ÔÇØ Get it in writing. Save money.
Just be aware that if you settle for less, you will get a 1099-c for the difference. This will count as income and you will need to pay taxes on this amount.
There are lots of different credit scoring models. The most popular of those make no difference between an unpaid collection, a settled collection, and a paid in full collection. So don’t expect your credit to improve just because you paid it unless you are able to negotiate a “pay-for-delete” which would entirely remove the collection from your record. Those are often rare and difficult to get because the credit bureaus dislike them and threaten to remove access for collectors that do too many of them.
Newer FICA & Vantagescore models do give you some positive points for paying a collection in full, and a lesser amount for a settled collection. Not a lot of lenders use those yet.
One thing to consider before paying any old collection is what the statute of limitations are for debts in your state. That can range from 3-10 years depending on your state; so the debt could already be expired in which case their is little benefit to paying it. The potential for getting sued over a 2.2k debt should be a much bigger concern than its impact on your credit score.