I’m often asked the question, “Will debt settlement affect my credit score?”

It’s interesting that many who call me have already fallen behind on their payments, thus their credit may have already been affected, though it may not be showing yet on their credit report or they just haven’t checked their credit report recently.

If you are current on your payments it is very difficult, if not impossible, to settle your debt. Typically credits want to see that you are in a hardship situation before they are willing to negotiate. Therefore you will have to voluntarily stop paying your unsecured debts allowing them to go into delinquency before settlement.

In addition you cannot pick and choose which debts you wish to settle in most cases. Your creditors or collection agencies may review your credit report and most will be unwilling to negotiate when they see that are being offered less than what is owed to them when others are being paid on time as agreed.

Secured debts such as a home or a car are collateralized. You should continue to pay these accounts on time to avoid repossession or foreclosure proceedings.

By not paying your creditors, you credit will be adversely affected by debt settlement. However, having to experience this circumstance is almost always better than a bankruptcy, especially on your credit rating.

During your debt settlement program, your total balances are being lowered over time as they are settled in full: a great start to recovery.

There is no reason why your credit shouldn’t rebound upon completing your debt settlement program, and while no reputable debt settlement firm should guarantee any form of credit score improvement, case studies of previous clients are a great way to see proven examples of the results experienced by consumers just like you.