When a debt settlement arrangement is made does the bank write off the debt at the time of the agreement?

One answer Banks, like most all Cos, have an accounting process where they essentially record bad debt write offs before they occur. Based on historical experience, when they make a loan they actually establish (more correctly change the one they have), to establish a reserve for the anticipated bad debts. So, if a company sells $100 of something...it records that as sales revenue, and base on experience (say 10% bad) records a$10 to a reserve account...netting $90 of recorded income for the sale.

The loss on any particular account is taken against this reserve, which is adjusted as experience and financial conditions dictate. (So as I write this in 2008, with many companies experienceing increased defaults on payments, they may say lets increase our reserve to reflect instead of 10% of sales, 12% of all collectibles/sales) A further answer They clear the debt from your name and your credit report. They would mention Cleared in partial in your credit report.

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