In most cases, creditors cannot later seek the forgiven portion of a debt if both parties execute a written settlement agreement.
Borrowers who negotiate debt settlements with creditors are generally protected from future collection efforts once a written agreement is completed and its terms are met. However, consumer finance experts say legal, administrative, and contractual issues can still reopen questions about a resolved debt in certain situations, CBS News reports.
With U.S. household debt at a record high and average credit card interest rates hovering near 22%, more consumers are pursuing debt settlement to reduce what they owe rather than continuing to make only the minimum monthly payments, the outlet reports. A settlement typically allows a borrower to satisfy an account by paying less than the full balance.
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