And if the creditor refuses your offer, get that in writing as well. Each bureau should update your credit report to show that your settlement is paid. One thing that Chapman advises consumers not to do is to use the services of consumer counseling finance companies. Lenders do not have a negative view of partial payment settlements, however, because that shows that a debtor took responsibility for resolving debt problems, she said. Once your bills have been straightened out, close all unused credit accounts and keep only a couple of cards to re-establish yourself in lenders' eyes as a responsible credit user.
Chapman advises against filing for bankruptcy.
The process does relieve you of crushing debts, but the fact that you sought bankruptcy protection remains on your credit report for 10 years. Prospective lenders will definitely hold that against you, said Roger Whelan, a bankruptcy attorney in Baltimore. You'll pay the credit card company up front. Each time you use the card, you'll tap into the available funds. Road to Recovery Ironically, the only people who come out of bankruptcy relatively unscathed are those who have significant assets.