Does lump sum settlement affect my credit score?

I have a 3 year old loan and i still have to pay $75.000 off. It is rather difficult to pay it and i was suggested to work a lump sum settlement with the bank. If i do so, pay less money to cover my loan, does it lower my credit score? or does it have any other neggative affect on my credit history.

Thanks!

Does lump sum settlement affect my credit score?

The only way a bank is going to accept a settlement is if you are already delinquent and they are willing to take a smaller amount rather than risk you filing bankruptcy and getting nothing. Yes. This will definitely hurt your credit score. It says you cannot pay your bills as agreed so it will show as negative. However, if you are already delinquent that is reporting negatively each month anyway, so I guess it would be a wash. I have also heard lately though that any debts you have written off by a creditor is considered income (in a way) and you will receive a 1099 form and will have to pay taxes on the amount that was written off.

Does lump sum settlement affect my credit score?

If this is a current loan, why would the bank agree to settle for less than the full balance? It is very unlikely you will get such an agreement from them.

Typically you can get lump sum settlement on old debt that is owned by collection comanies. They bought the debt at deep discount and can settle for less and still make a profit.