Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
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1) "My question is if I settle this will it improve my credit? Or would it be necessary to pay it off in entirety? If so, would that help clear my credit?"
Settling an outstanding judgment should improve your credit, although it will be reported to the credit bureaus as a "debt settlement," which isn't quite as good for your credit as satisfying the judgment by paying the full amount of the judgment. On balance, most people would be better off settling the debt instead of paying the judgment in full. Even if you fully satisfy the judgment, it can still be reported to the credit bureaus for up to seven years after the judgment was entered, so there's no way to truly "clear" your credit report.
2) "I am more worried about the student loans (3, totaling over 70000) that cannot be discharged."
Generally speaking, unless the credit card company is taking active steps to collect the judgment debt (i.e. attempting to garnish wages, levy bank accounts, etc.), the student loan debt (especially if you're behind on payments or in default on any loans) should be a priority since it is non-dischargeable in bankruptcy. Many attorneys would advise you to deal with the judgment first, but I would personally wait and deal with any delinquent or defaulted student loans first unless you have, for instance, $10,000 sitting in a bank account that could be easily levied by a judgment creditor.
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The student loan delinquency or default could still be reported to the credit bureaus for up to seven years after the loan has been paid in full. However, the student lender might agree to voluntarily remove the delinquency or default from your credit report. You would want to specifically request a statement in writing that the lender will remove the delinquency or default from your credit reports once you pay in full, as they're not required to do so under federal law. Should the student lender subsequently fail to follow through with their promise, having something in writing might help you dispute the derogatory notation directly with the credit bureaus.
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