Debt settlement means that your creditor permanently writes off what you owe.
Settling your debts means negotiating with your lenders and creditors, to pay off your balances owing for less than the full amounts. Many creditors will accept a fraction of what you owe, and permanently forgive you of repaying the rest.
Why would my lender accept 10% - or less - of what I owe them?
In these tough financial times, lenders and creditors are very aware that their debtors - people like you - may declare bankruptcy. And then they will receive nothing. That’s why many lenders are willing to negotiate now, and receive only pennies on the dollar, to permanently settle your debts.
Debt settlement works for unsecured and undersecured debts.
An unsecured loan means that there is no collateral. Debt settlement can be negotiated for debts such as credit card debt, medical debts, and promissory notes. If you are underwater on your mortgage, it can even work for undersecured notes, such as second liens or judgment liens.