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Settling a debt, do I send them a check or money order?

Los Angeles, CA |

Being sued for a debt and would like to settle. I have been told that I'm not to give any of my info (bank account, etc.) to the other party. But if settling I should give them a money order, is this correct?

Must they send a IRS Form 1099-C ? Do I want them to send me a IRS Form 1099-C ? If not how do I get them to agree not to?

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Attorney answers 4


There is no right or wrong answer. The key is to get, in writing, a confirmation of settlement; which basically says that Creditor agrees to accept $X amount as full accord and satisfaction of ABC debt. On your end, you do want to make payment in a way that you can track that the payment cleared.


Unless the settlement agreement and release expressly specifies that payment must be made by cashier's check or by money order or by wire transfer or by regular check, it does not matter how you pay. Just make sure you have a way to prove you made the payment.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.


Sending them a check is fine if it is a final settlement of the amount in dispute. Often people who make partial payments later find, after judgment, that the creditor knows exactly where they keep their money. If it is the only check you will be sending, you should not have a problem.


You have a written settlement agreement, signed by an authorized representative of the creditor, do you not? The settlement agreement includes method of payment, date(s) of payment, how the account will be reported to the credit reporting agencies, whether the creditor will be sending you an IRS Form 1099-C next January, thereby requiring you to pay income tax on the amount of the reduction that you negotiated?

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