What Should You Do When Your Collector or Creditor Comes Up with a Settlement Offer?

Nothing could be better than getting a debt settlement offer from your creditor on a debt which possibly you couldn’t pay back in full. You must have been thinking about getting in touch with your creditor and discussing your inability to repay the debt in full and requesting for a debt settlement. Now you no longer need to initiate any debt settlement discussion or convince your creditor to settle the outstanding debt as they have made the settlement offer on their own.

However, you need to contain your excitement about finally getting rid of your debt. You must find out if the settlement offer is at all legitimate. Only when you are convinced then you may follow the subsequent suggestions before rejoicing at the idea of being free from the insurmountable burden of debt.

Examine the Significant Debt Time-Limits

Debt collectors are in the habit of sending settlement letters usually, as some sort of a trick to push debtors into making one or even more partial payments particularly, on any time-barred debt, which implies that the statute of limitations on the debt has actually expired.

When you initiate a payment, it would be restarting the statute of limitations thus, allowing the collectors some more time for suing you for outstanding debt. When you receive a settlement offer, you must first of all, examine the statute of limitations relating to your debt.

In the event when the statute of limitations seems to have already expired or maybe it is almost about to expire, settling the debt would not actually be worth the effort.

Moreover, you need to consider carefully, the actual credit reporting time-limit before jumping at the offer of debt settlement. If your debt is still showing on the credit report, your credit score would be affected adversely by the debt settlement just the same way as bankruptcy filing. On the contrary, if your credit report does not show your debt, there is no point in settling your debt as the scar of an unpaid outstanding balance actually does not exist anymore. Check out some debt settlement reviews online for more information.

Stay Away from Scam Settlement Offers

There have been incidents of fake settlement letters being sent by the collectors. Often these types of settlement letters are even sent for fake debts. Before you decide to pay any money in response to any unsolicited debt settlement offer, you must ensure that the debt is very much yours and that you are interacting with a legitimate creditor. You could proceed to make the payment once you are satisfied with the legitimacy of the offer.

It is very challenging indeed to identify a fake debt settlement offer. However, some signs that may indicate that the offer may not be coming from legit sources include grammatical errors, misspelled words, and vague references to ‘the client’. There would be no instructions for paying via wire transfer. Some untraceable payment method would be suggested.

Choose Any of the Two Debt Settlement Options

If you have received a debt settlement offer and wish to go ahead with the settlement offer there are two ways of responding to the offer. You could accept the debt settlement offer by paying off the entire settlement amount. Another way is to go about negotiating with the company for a much lower settlement than what has already been offered. In both cases, you must have the settlement terms clearly mentioned in a written document on preferably the company letterhead and duly signed by the authorized persons.


Keep all the above suggestions in mind while responding to any unsolicited debt settlement offer from your collector or creditor. Also, remember there could be some tax implications when you accept a settlement offer. You may get any1099-C Cancellation of Debt FORM for listing your canceled debt as specifically your income on the tax return. You would need to include this notice along with the document stating your income and expense while visiting your tax preparer.