Debt settlement is intended for consumers that can no longer make the minimum payments on their unsecured debts, but can afford something less and want to avoid bankruptcy.
The first thing to consider is the type(s) of debt that you owe. In most all cases, unsecured debts will be accepted.
Unsecured debts are debts that are not secured by an asset. The most common types of unsecured debts are credit cards, store cards, medical bills and most debts in collections.
Some examples of debts that are not typically serviced debts secured by an asset, or are considered "secured debts". Secured debt mostly consist of home loans, automobile loans, furniture loans, student loans and unpaid Federal and State taxes.
With secured debt, a creditor has no reason to engage in the settlement process because they can simply repossess the asset (i.e. your home, car, etc.). Meaning they can simply take your car from you rather than allow you to pay less for it.
But with unsecured debt, like a credit card, you did not put up any collateral in order to obtain the loan. For this reason, the creditor may want to settle with you to ensure that they receive some money.
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