Posted on July 30, 2009 at 7:55 pm Chase has offered to enroll me in their "debt liquidation" program - fixed payments at 6% interest (it's now 29.99%) and will be paid off in 5 years.  Bank of America has made a similar offer, i think they call it a hardship program - fixed payments at 4.75% interest (it's now 16%) and will also be paid off in 5 years.My question is this:  what effect will closing these accounts and enrolling in these programs have on my credit score?  Also, how do the negative effects compare to debt settlement?Any advice is appreciated!

Posted on August 6, 2009 at 9:44 am If they close your accounts- it will show up that they are closed on your credit report. This is a negative mark in the eyes of the lender. Closed by lender is worse than closed by consumer also so you know. Debt settlement, on the other hand is a bit different. Your accounts must be delinquent to settle, so that has a negative impact on your payment history until the accounts are in fact settled. Then, once the debt is settled, it will be reported as "settled" or "settled for less than the full amount" or something similar (key word is settled). This mark will remain on your credit report for 7 years from the date the account was settled. So, settlement overall would have more of a negative impact. But in terms of what is the better option- that is really all about how much you owe and whether or not you are behind on your monthly payments already.