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Will settling an account restart the 7 year reporting?

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I received a settlement offer for a Target account that is 3 years old. It is for a very low amount and the account is still owned by Target financial.  My question is if I send the payment to settle this account in full will it restart the 7 years on my credit report? I’m asking because I was on a payment plan with another creditor and they re-aged the account after my last payment which caused an additional 2 years to be added to how long it will now be reporting. Appreciate anyone that can help answer this. I am in SC. 

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  • 2 months later...

Statute of Limitations has 2 different meanings in the world of credit.  In regards to your credit found in your credit bureaus, an account that is negative in any way will stay on your credit report for 7 and 1/2 years.  Simply settling the account doesn't restart the Statute of Limitations clock for the credit bureau trade line. . When you are talking about liability of the credit trade line itself, the Statute of Limitations goes by state code.  For example, credit cards are known as open accounts, and South Caroline has a 3 year Statute of Limitations which starts after last payment before account went negative.  After that time period they may not sue you but the creditor may still collect.  If they sue you out of the Statute of Limitations window then they can be sued.   

If you pay it for less that what is owed they will send you an IRS 1099-C.  This is hard to get around for an original credit like Target.  This would be the time for you before any payment is made to try and negotiate a better credit bureau status for that trade line by asking for them to note it as paid as agreed.  Otherwise they will show it as settled or settled for less than owed which are negative comments showing negative account information.  It never hurts to ask and they have heard it all before. 

By the way, if you are able to make it a positive account by getting them to show paid as agreed and if payment history notations are cleared for the months you didn't pay, your credit trade line for the credit bureau will stay for a 10 year period showing as a positive account helping your credit.  Some incentive for striking a good deal with your settlement monies.   Good Luck!

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