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Does credit card debt forgiveness hurt your credit score?

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Credit card debt forgiveness can impact your credit score, but that may not be the case for every cardholder.

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With persistent (but cooling) inflation driving up the cost of consumer goods, high interest rates increasing the cost of borrowing and a softening job market making it tougher to find employment, a significant amount of pressure has been weighing on household budgets. As a result, more people are using their credit cards to help make ends meet, leading credit card debt to hit a record-breaking $1.14 trillion nationwide.

While credit cards can provide short-term financial flexibility, they come with a significant risk: elevated interest rates. With average credit card rates hovering near 23% currently, unpaid balances can snowball rapidly, trapping borrowers in a cycle of mounting debt. For those struggling to keep up with payments, credit card debt forgiveness, also known as debt settlement, may seem like an attractive solution. 

With credit card debt forgiveness, the goal is to have your creditors accept a lump-sum settlement that’s lower than your current balance, reducing the total amount you owe. When negotiations are successful, it’s possible to have your credit card debt reduced by 30% to 50% or more — providing significant relief from your high balances. Before pursuing this option, though, it’s important to understand how it could impact your credit score.

Learn how credit card debt forgiveness could help you now.

Does credit card debt forgiveness hurt your credit score?

The short answer is yes, credit card debt forgiveness can negatively affect your credit score. However, the impact depends on various factors, including your current credit score and the specifics of your debt settlement agreement.

When you engage in debt settlement, you typically work with a debt relief company that negotiates with your creditors to accept less than the full amount owed. This process often involves several steps that can harm your credit:

  • Stopping payments: Most debt relief companies advise you to stop making payments to your creditors and instead save that money for potential settlements. This strategy can lead to missed payments being reported to credit bureaus, which can significantly damage your credit score.
  • Account status changes: As you fall behind on payments, your accounts may be marked as delinquent or sent to collections, further lowering your credit score.
  • Settlement reporting: Once a settlement is reached, the creditor will typically report the account as “settled for less than the full balance” on your credit report. This notation can negatively impact your credit score and remain on your report for up to seven years.
  • Closing accounts: Settled accounts are usually closed, which can reduce your available credit and potentially increase your credit utilization ratio, which can then lower your score.

The magnitude of the impact on your credit score can vary, however. For example, if you currently have a high credit score, you may see a more dramatic drop, as the negative items will contrast sharply with your previously positive credit history. On the other hand, if your credit is already damaged due to late payments, high credit utilization or other factors, the additional impact of debt settlement may be less severe.

It’s worth noting that while debt settlement can hurt your credit score in the short term, it may still be a better option than continuing to struggle with unmanageable debt or filing for bankruptcy. Over time, as you rebuild your credit, your score can recover

Don’t let your credit card debt continue to grow. Find out how the right debt relief company could help now.

How to decide if credit card debt settlement is right for you

Deciding whether to pursue credit card debt settlement requires careful consideration of your financial situation and long-term goals. Here are some factors to weigh:

  • Debt amount: Debt settlement is typically most beneficial for those with significant credit card debt, usually $10,000 or more. If your debt is lower, other options like a debt management plan, debt consolidation or a balance transfer might be more appropriate.
  • Ability to pay: Consider whether you have the means to make meaningful progress on your debt through regular payments. If not, debt settlement could provide relief and help you avoid bankruptcy.
  • Credit score implications: If maintaining a high credit score is crucial for your near-term plans, debt settlement may not be the best choice. However, if you’re willing to accept a temporary hit to your credit for long-term financial stability, it could be worth considering.
  • Tax consequences: Be aware that forgiven debt may be treated as taxable income by the IRS, so it could mean paying more in taxes.
  • Time frame: Debt settlement programs typically take two to four years to complete. Consider whether you’re willing and able to commit to this process.

The bottom line

While credit card debt forgiveness can offer a path out of overwhelming debt, it’s not without its drawbacks. The impact on your credit score can be significant, potentially affecting your ability to obtain credit, secure favorable interest rates or even rent a home in the near future. For those drowning in high-interest credit card debt with no clear way out, though, the long-term benefits of debt settlement may outweigh the temporary credit score damage. 



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Man accused of stalking college basketball star Paige Bueckers found with an engagement ring near airport

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A man accused of stalking and harassing UConn basketball star Paige Bueckers said on social media that he intended to marry her and had an engagement ring and lingerie in his possession when he was arrested near a Connecticut airport, according to police reports.

Robert Cole Parmalee, 40, posted statements on TikTok and sent emails to University of Connecticut officials that showed an infatuation with Bueckers and included threats, police said.

Parmalee, whose last known addresses were in Grants Pass, Oregon, and Ritzville, Washington, was ordered detained on $100,000 bail Monday after being arraigned on the charges in the courthouse in Rockville, Connecticut. He was also ordered to stay away from a person named in court as “P.B.” and banned from the UConn campus in Storrs.

His public defender did not immediately return an email seeking comment Tuesday.

Parmalee was initially arrested on Aug. 27 while walking along a highway near Bradley International Airport near Hartford. He told a state trooper that he had just flown in from the Pacific Northwest and was on his way to see Bueckers at UConn, the police reports said, adding he was found with a ring and lingerie.

The trooper took Parmalee into custody when he learned there was an arrest warrant out of Josephine County, Oregon, accusing Parmalee of setting a home on fire with roommates and pets inside, police said.

Parmalee had posted photos, videos and comments about Bueckers on TikTok and other social media platforms and had been emailing UConn officials since June with rambling comments including his desire to marry Bueckers, police said. The postings and emails initially did not warrant criminal charges, but his comments became alarming over time, the reports said.

An arrest warrant affidavit redacts the name of the UConn student at whom Parmalee’s posts were directed and names her only as “V1,” but says Parmalee posted on social media about his desire to marry V1.

“Parmalee has shown a continual, escalating behavior and directed effort to make electronic postings about V1 and threats against those close with V1 which has caused emotional distress over the past two weeks for V1,” a UConn police officer wrote in the affidavit dated Friday.

V1 told police that she discovered that Parmalee had been sending various videos to her Instagram direct messages since February, but they were not threatening. She said she did not respond to the messages. She said she became concerned for the safety of herself, her family and her teammates after learning of Parmalee’s arrest near the airport.

In a TikTok posting reviewed by The Associated Press, Parmalee referred to a photo of Bueckers and an unnamed man, writing, “This is worth it for this guy, huh? … this is just one guy, I’ll sacrifice him, no problems, no questions asked.” The police reports mention that post and refer to V1.

In another post, he talked about bringing V1 flowers and finding her mother’s home, police said. He also wrote in a different post that if he cannot live with the woman of his choosing — referring to V1 — then, “I will choose to die, and I will choose to take all of you that pose me, oppose us, to hell.” He also tells V1 that “if you allow them to touch you, you allow them to die,” according to the police reports.

In a TikTok post before he arrived in Connecticut, Parmalee wrote, “I’m coming to UCONN Paige Madison Bueckers, I’ll be in Hartford tomorrow morning,” and included a photo of himself with airline tickets at an airport.

Parmalee was initially detained on the arson warrant out of Oregon before being charged with felony stalking and misdemeanor harassment and breach of peace by UConn police.

The police reports say Parmalee has a criminal history dating back to 2002 that includes arrests for misdemeanor sexual abuse, harassment, burglary, driving under the influence and possession of methamphetamine. Police officials in Oregon told Connecticut authorities they had no information related to mental health calls associated with Parmalee.

Bueckers, from Hopkins, Minnesota, was named the national player of the year as a freshman. She spent roughly two years recovering from knee injuries before returning to the court last season, taking her team to the Final Four where they lost to Iowa, which was led by Caitlin Clark. 

The 22-year-old announced that she will return for a fifth year at Connecticut.



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Venezuela says 4th American arrested over alleged “plot” against Maduro

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Venezuela said Tuesday it had arrested a fourth U.S. citizen over what it claims was a plot to assassinate President Nicolás Maduro in the aftermath of elections the opposition claims he stole.

The American was arrested in Caracas after “taking photos of electrical installations, oil facilities, military units,” Interior Minister Diosdado Cabello said. Three other U.S. citizens, two Spaniards and a Czech have also been arrested in Venezuela in recent weeks.

Cabello told the National Assembly the man was “part of the plot against Venezuela, the plot against our country,” which he said included a plan to “assassinate President Nicolás Maduro” and others, including himself.

On Saturday, Cabello announced the arrest of the other six foreigners, whom he said worked for intelligence agencies and the Venezuelan opposition.

One of the Americans was identified as an U.S. Navy sailor detained in Venezuela earlier this month. A State Department spokesperson told CBS News in a statement Saturday that the Biden administration could confirm the detention of the sailor.

Washington, Madrid and Prague, who have denied involvement in any plot against Maduro, on Monday demanded information from Venezuela about their citizens.

Maduro said Monday they had all “confessed.”

Venezuela has been engaged in a war of words with the U.S., which recognized Venezuelan opposition candidate Edmundo González Urrutia as the winner of the election. Washington last week announced new sanctions against 16 Venezuelan officials, including some from the electoral authority, for impeding “a transparent electoral process” and not publishing accurate results.  

Tensions between Caracas and former colonial power Spain rose sharply after González Urrutia, 75, went into exile in Spain a week ago, after being threatened with arrest.

Last week, Caracas recalled its ambassador to Madrid for consultations and summoned Spain’s envoy to Venezuela for talks after a Spanish minister accused Maduro of running a “dictatorship.” Venezuela was also angered by Spanish Prime Minister Pedro Sánchez’s decision to meet with González Urrutia and warned Spain against any “interference” in its affairs.



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Kamala Harris speaks to National Association of Black Journalists

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Vice President Kamala Harris spoke to a panel of journalists at a National Association of Black Journalists event in Philadelphia. Harris addressed the Springfield, Ohio, debunked claims about Haitian immigrants, the apparent assassination attempt against former President Donald Trump and other issues at stake ahead of the November election.

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