What are the risks of choosing to settle a debt?

When choosing to settle a debt in Nebraska, there are a few risks one should be aware of. The first risk is that the creditor is not legally obligated to accept a settlement. This means that by attempting to settle the debt, one may not save any money. A second risk is that settling the debt will have a negative effect on one’s credit score. When a debt is settled, it will remain on one’s credit report and will show that only a partial payment was made. This can have a lasting effect for years. A third risk is that the creditor may attempt to collect the full amount of the debt from the individual. This is because settling a debt does not completely eliminate the debt. The creditor still technically has the right to try and collect the full amount, even though the individual has already settled the debt. A fourth risk is that the creditor may report the unpaid portion of the debt to the Internal Revenue Service (IRS). The IRS may then try to collect the unpaid portion of the debt from the individual as additional taxes. By being aware of these risks, one can make an informed decision and weigh the options before choosing to settle a debt.

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What are the risks of choosing to settle a debt?

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