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Does Negotiating with Creditors Affect Your Credit?

Debt settlements are an effective way to reduce debt without having to go through bankruptcy. However, creditor negotiations are still complex and can leave a mark on your credit. Our New York debt relief attorneys explain how debt negotiations can affect your credit and if it’s still a good option to help you get rid of your debt.

How Debt Negotiations Affect Credit Reports

Debt settlements typically do have a negative impact on credit reports. However, the impact it will have on your credit score will ultimately depend on the following factors:

  • The current condition of your credit
  • The reporting practices of your creditors
  • How much of your debt is being settled
  • Whether your other debts are in good standing
  • How much less than the original balance the debt is settled for

For example, suppose you’ve been relying heavily on your credit card to make ends meet and you are now dealing with overwhelming debt. You haven’t made a ton of payments on your credit card so your credit score has significantly decreased. In this hypothetical situation, since your credit score is already low, debt negotiations won’t have a significant effect on your credit. On the other hand, it can be beneficial to your credit since it will help you get rid of your debt burden and allow you to start focusing on rebuilding your credit.

However, suppose your credit score is not in a bad rank but you are having trouble making car payments. In this case, your credit score may suffer since it was initially in a good state. If you are concerned with how much your credit will be affected after settling debt, you should consult with an experienced debt relief attorney to get some insight into your unique situation.

Seeking Legal Guidance

If you want to negotiate with creditors to reduce your debt, you need an experienced attorney on your side. Debt negotiations may seem straightforward, but one minor mishap can significantly impact the outcome of your case. Our team at Jacovetti Law, P.C. can help you from start to finish so that you can get a fresh start.

Contact us today at (516) 217-4488 to schedule a consultation!

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