Once an account has gone into default, which generally occurs after it becomes six months past due, it can only remain on the consumer’s credit reports for seven years from that point. After seven years from the default, the account will be purged from the consumer’s reports.
You can dispute the item, settle it, pay the item in full, or ignore the item and it still cannot stay on a credit report longer than seven years from the date of default.
Myth #5: Debt settlement is a bad idea
Truth — Even if settling a delinquent debt will not improve a consumer’s credit scores it is still probably a smart financial move.
If a consumer can afford to settle a collection account with a debt settlement then they probably should go ahead and do so. Settling defaulted debts with a debt settlement is a cost effective way to satisfy the creditor and move ahead with your life.
The alternative of ignoring collection accounts is a horrible idea that can lead to judgments being filed against you if you were to be sued by your creditors.
Not only can settling a debt protect a consumer from the aforementioned “legal” collection attempts, but settlements can also save a consumer a ton of money in the long run and stop those annoying collection phone calls. Keep in mind that most defaulted debt is sold for pennies on the dollar so even though the collector is accepting a settlement they’re still making several hundred percent on their investment.