Posts Tagged: Credit

Debt Resolution Companies and Your Credit.

Many people try to do whatever they can to avoid bankruptcy, for some people this includes entering into agreements with companies that promise a lower payment by consolidating their debt. These companies come in a variety of flavors. That is a topic for another time though. What many of them will do is enter into an arrangement with you where you make a monthly payment to them, then they either hold the money until they have enough to make an offer on any one particular debt, or they make small monthly payments to all of the creditors at once. The problem is, this doesn’t stop those creditors from negatively reporting to the credit bureaus. It also doesn’t necessarily stop the creditors from suing you in state court, obtaining a judgment, and garnishing your wages. Another problem is that if they do settle, it will show up as settled for less than full amount which hurts your score. On top of that, if you settle, you will likely get a 1099 from the company and likely will have to claim the forgiven amount as income on your taxes. That will either mean you will have …

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