Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Likely lump-sum settlement
$1,134
Suggested opening offer
$680
Payment-plan settlement total
$1,338
Monthly plan payment
$223
Forgiven amount (possible 1099-C)
$3,066
Estimated tax on forgiven debt
$675
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How to use this
- 1Enter balance claimed ($).
- 2Enter months since last payment (months).
- 3Enter who holds the debt.
- 4Enter cash you can pay today ($).
- 5Enter plan length if not lump sum (months).
- 6Enter marginal tax rate (%).
- 7Read your likely lump-sum settlement on the right — it updates as you type.
- 8Hit Share to keep the scenario or send it to someone.
About this calculator
Debt buyers often purchase charged-off accounts for cents on the dollar, which is why settlements below face value are common — but the number a collector will accept depends on how old the account is, whether it is with the original creditor or a third-party buyer, and whether you can pay in one lump sum. This calculator estimates a realistic opening offer and a likely landing zone based on those factors, shows what a payment plan version would cost, and flags the potential taxable forgiven amount, since cancelled debt over the reporting threshold is often reported on a 1099-C. Get any agreement in writing before paying, and be aware that a payment can restart the statute of limitations in some states. Educational estimate only, not legal or tax advice.
Worked example
Using the values the calculator loads with:
Inputs
- Balance claimed: 4200 $
- Months since last payment: 20 months
- Who holds the debt: Debt buyer
- Cash you can pay today: 1500 $
- Plan length if not lump sum: 6 months
- Marginal tax rate: 22 %
Results
- Likely lump-sum settlement: $1,134
- Suggested opening offer: $680
- Payment-plan settlement total: $1,338
- Monthly plan payment: $223
- Forgiven amount (possible 1099-C): $3,066
- Estimated tax on forgiven debt: $675
What each field means
Inputs
- Balance claimed ($)
- The balance claimed used in the calculation, measured in $. Starts at 4200 $ so you have a working example on load. Accepted range: 0–500000 $.
- Months since last payment (months)
- The months since last payment used in the calculation, measured in months. Starts at 20 months so you have a working example on load. Accepted range: 0–240 months.
- Who holds the debt
- Pick the option that matches your situation — the maths changes per option. Choices: Original creditor, Collection agency (contingency), Debt buyer.
- Cash you can pay today ($)
- The cash you can pay today used in the calculation, measured in $. Starts at 1500 $ so you have a working example on load. Accepted range: 0–500000 $.
- Plan length if not lump sum (months)
- The plan length if not lump sum used in the calculation, measured in months. Starts at 6 months so you have a working example on load. Accepted range: 1–36 months.
- Marginal tax rate (%)
- The marginal tax rate used in the calculation, measured in %. Starts at 22 % so you have a working example on load. Accepted range: 0–50 %.
Results
- Likely lump-sum settlement
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Suggested opening offer
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Payment-plan settlement total
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly plan payment
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Forgiven amount (possible 1099-C)
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Estimated tax on forgiven debt
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Will settling remove the account from my report?
Usually not. It typically updates to 'settled for less than full balance', which stays on the report for up to seven years from the original delinquency.
Should I ask for pay-for-delete?
You can ask, but many collectors decline because credit bureau agreements discourage it. Never pay before you have the agreed terms in writing.
Can paying restart the clock?
In some states a payment or written acknowledgment can restart the statute of limitations on suing for the debt. Check your state rules or consult an attorney first.
Is forgiven debt taxable?
Forgiven debt is often treated as income and may be reported on Form 1099-C, though exclusions such as insolvency can apply. Talk to a tax professional.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Collections Settlement Offer Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/collections-settlement-offer-calculator
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/collections-settlement-offer-calculator" target="_blank" rel="noopener">Collections Settlement Offer Calculator — RevenueLab</a> (2026).</p>
Source: [Collections Settlement Offer Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/collections-settlement-offer-calculator) (2026).