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Hi @Lendsey Kallaby The good part about settling with a credit card company is obviously that usually you get part of your debt forgiven. You usually get the best deal when you can do a lump sum settlement, which it sounds like you're doing. The drawback is that it's reported as negative information on your credit reports because you've paid less than you owe. That said, if the account has already gone to collections, the damage has most likely been done already. The other thing to be aware of is that any debt that's forgiven over $600 is treated as ordinary income by the IRS. So you have to be prepared for a tax bill next year.

Hi @Lendsey Kallaby! I'd recommend taking a step back and looking at your finances overall. Your cash and your credit are both integral to your overall financial health.

Instead of focusing on using the cash to settle your debt, I recommend thinking about how this cash can best help you reach your financial goals based on your current situation. Will this cash be better served to pay rent or other bills to help prevent accumulating additional credit card debt? Or will you be better served to pay down your debt and free up some of your credit utilization?

It all depends on your financial situation and goals. Here is more guidance to help you decide on the best actions to take.

Hope this helps!

We need more info about your situation to be able to offer any solutions. But pretty much CC debt in collections will result in NO benefit to pay it off. The damage of poor payment history, credit utilization rate and being in collections has already done its damage. Settling now will not raise your score. IMHO It is a waste of money. Take that money and open a secured credit card and restart new, responsibly paid CC debt.

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