Credit Advice

Ahh the beauty of a collection agency tradeline(if that is what it is). Whether you pay it in full, settle it, or don't pay it at all really does not matter because it still abuses your credit pretty much the same. If you are talking about a credit card in collections with that company and reporting a balance then paying in full is a ton better than settling and here is why.
1)settle=profit/loss notation. This is just about as bad a a bankruptcy notation
2)if they settle and cut off $600 or more off the debt they have to file a 1099-c with the IRS which counts it as income. Welcome to an expanded tax bill at the end of the year
3)the biggest of all- they are liars. Unless you get something from them that states xx amount settles this account IN FULL they will turn around and sell that difference to another agency who will then collect on it. Now you are just racking up the negative tradelines, harassment, and those lovely hard collection inquiries.

I would go to creditboards.com and post on there(is free). Give more details like the age of the debt, who it is with, and your state. I am trying to answer your question with just general information.

As a side note: if you choose not to pay, it will not only hurt your credit because it'll be on your reports, but the creditor can sue you and win a judgement.

Thank you so much for your response. The creditors vary but mainly are credit cards of some sort or the other. The info on getting a paid in full letter is very helpful - all of these debts are so outstanding that they are already at the worst rating possible. While applying for a construction loan recently we were able to see these things on the report and she said it is way worse to settle vs paying in full which is different then what we've heard from everyone else. So I suppose I'll settle & be sure to get confirmation that it is paid in full. As far as the IRS goes - I don't know what to think about the way the government is doing things right now. We are already struggling (I was laid off over a year ago and am unable to find any work) & my fiance (who's credit we are talking about) is the only income we have. They are now forcing him to file a certain way which guarantees they get nearly 50% of his checks. We've never heard of this happening to anyone before but the IRS was sure to get their point across in a series of letters explaining their instruction to his employer (with no outstanding IRS debt - we just don't get it). At this point, it's just a struggle to get his credit cleaned up from a series of bad decisions he made when he was in his early 20's for about 6 months and trying to stay afloat. Anyway, thank you again very much for the advice we sure do appreciate it!