Is A Credit Report Mandatory For Debt Settlement?

If you are faced with a great deal of unsecured credit card debt, you may have decided that you need to take the option of debt settlement rather than facing bankruptcy or increasing delinquent fees and collections calls. Most credit card debt settlement companies will ask for your social security number or other information when you decide to consult with them, in order to pull a credit report to see how your financial situation is seen by creditors and other agencies to whom you might owe money. So, what is the credit report debt settlement connection and is a credit report required? The answer may surprise you.

Credit Report Debt Settlement Rules

A credit report is not mandatory for debt settlement by any legal statutes; however, there are very few reputable companies who will do business with you regarding debt settlement without having a credit report. There are a number of reasons for this:

The first reason is that in order to properly settle your debts, the debt settlement company must have an accurate and complete picture of your credit history and your current obligations. The information that you provide them may be incomplete, or the information on the credit history may be incorrect, and these situations need to be remedied before debt settlement can take place.
Another reason a credit report is required by most companies for debt settlement purposes is that they need to know your credit score in order to help negotiate the best possible settlement with your creditors. By finding out whether or not you are behind on payments, and if so, how far behind you are, the debt settlement company can try to assess what bargaining position they will take with your creditors, and what chance they have of getting the best possible settlement.
If you have good credit, most debt settlement companies will not work with you, because they cannot hope to receive a good settlement if you are not in obvious danger of defaulting on your bills.

There are laws under consideration as of 2010 in some states which would make a credit report mandatory for debt settlement, but so far, the credit report is only de-facto mandatory, meaning that you will not be able to proceed with your debt settlement without having a credit report pulled and provided to the debt settlement company. There really is little danger in having this credit report pulled, and you would be wise to have a credit report done annually anyway so you can check for errors and inconsistencies.

Getting Help

An experienced debt settlement attorney can explain more detail to you about the connection between your credit report and your ability to settle your debt. Your attorney can also help you to explore your options for debt settlement and to negotiate any and all terms of the debt settlement that are important to you.

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