I have business and personal credit cards that I am late on.  Many
have been "charged off" and reported as such.  I am not filing for
bankruptcy.

Most of the creditors have offered me a choice between an extended
payment plan, or a settlement for a much reduced amount - some only
for 40% of the balance.

The settlement agreements sound pretty attractive to me, if I could
somehow get the funds available.



Which offer is the best financial decision is obviously for me to decide.

What I'm wondering is the difference in impact on my credit report
from the different offers.



I know that both offers would be better for my credit report than my
"charged off" outstanding balances.  I know that neither offer will be
good for my credit report, but just better than what it is now.

I'm wondering, though, how future creditors would view a settlement
agreement, since I'm paying substantially less than I owe -- versus an
extended payment plan over a few years that paid the entire balance
owed.

I also know I won't have "future creditors" for a number of years, and
all this information will fall off in 7 years.  But, I'm wondering in
like 5 years whether creditors would look at a settlement paying part
of the balance as being worse than a payment plan that paid the entire
balance.

I'm worried that if I take the settlement agreements now, that it will
hurt me in the future more.

Another consideration is that if I make a settlement, the information
will fall off my credit report sooner than an extended payment plan,
since the date of the last activity with the credit line would happen
sooner.  I'd like for my answer to ignore this consideration, and just
focus on how creditors view settlement agreements vs payment in full
over time by a payment plan.

The extended payment plan will be much better for your credit score as
long as the company officially changes your minimum payment due to the
new lower amount (ask them if they do this before accepting this new
plan).  If they keep your minimum payment due higher and simply tell
you that it's ok to pay less then your credit history will show that
you failed to pay the minimum every month and that will greatly harm
your score.

The extended plan will remain with your credit history longer for the
reason you mentioned, but this is a good thing.  With the extended
plan you can meet the minimum payment every month and this will raise
your credit score significantly over time... just don't miss any more
payments.