Learn how debt settlement works, what it may cost, the risks to consider, and what questions to ask before enrolling in a program.
Debt settlement is a process in which a consumer or a representative negotiates with a creditor or debt collector to resolve an outstanding debt for an agreed amount that may be less than the full balance.
Some consumers work with debt settlement companies that offer negotiation services. These companies may ask consumers to make regular deposits into a dedicated account while funds accumulate for potential settlements.
Creditors are generally not required to negotiate or accept settlement offers. Results, costs, and timelines vary. Debt settlement is not suitable for everyone.
A typical debt settlement program may involve several stages. The exact process depends on the provider and your creditors.
Review your outstanding balances, income, expenses, and ability to save toward potential settlements.
If you choose a provider, review its agreement, fees, services, and risks before deciding whether to enroll.
Some programs involve deposits into a dedicated account to accumulate funds for potential creditor negotiations.
The provider may negotiate with creditors. Any settlement should be reviewed and documented before payment.
We help clients negotiate settlements with their creditors, and historically, those settlements have averaged around 40–50% of the enrolled balances.
That's the negotiated settlement amount, not your total program expense. Individual results vary, and we structure the program around a monthly savings deposit that works within your budget.
Explore Your Options →Example calculation
Enrolled debt balance
Illustrative negotiated settlement range
These figures illustrate the negotiated settlement amount only. They do not represent total program expenses, guaranteed savings or a settlement offer. Fees and other costs may apply.
Historical settlement results are not a guarantee of future outcomes. Actual results vary by creditor, account, circumstances and other factors.
Depending on the circumstances and creditor participation, debt settlement may offer certain advantages.
Debt settlement can involve significant financial and credit-related consequences.
Debt settlement providers commonly focus on certain unsecured debts. Whether a specific debt can be included depends on the circumstances and provider.
Outstanding balances on general-purpose and store credit cards.
Certain unsecured personal loans, depending on their terms.
Certain unpaid medical bills and healthcare-related balances.
Some other unsecured obligations may be considered after review.
Secured debts, federal student loans, tax obligations, and other specialized debts may have different rules and resolution options. Do not assume they qualify for a debt settlement program.
Before signing an agreement, research the company and understand exactly what it promises to do.
Does the company clearly explain its services and limitations?
Are all fees, account charges, and payment terms disclosed in writing?
Does the company explain the risks of stopping payments to creditors?
Does it explain that creditors may refuse to settle?
Can you review the agreement before enrolling?
Does the company avoid guaranteeing a particular settlement amount or result?
Can you independently verify its business details and complaint history?
Review your financial situation and explore information about potential approaches to managing outstanding debt.
Explore Your OptionsDebtCareSupport is an independent educational and referral platform. It does not provide debt settlement services or guarantee results.
