Settlement

Settlement summary:

• A settlement is a negotiated agreement for you to pay less than the full amount you owe, but the creditor accepts it as payment in full.

• Settlements only work for unsecured debts like credit cards, medical bills, and most personal loans.

• A professional debt resolution company can streamline the settlement process by creating a customized plan, negotiating with creditors, and processing payments once settlement offers are approved. 

Settlement definition and meaning

A settlement is an agreement that you or a debt resolution company negotiates with your creditor to reduce what you owe on a debt. After all settlement amounts have been paid, the rest of your debt is forgiven and the balance is zeroed out. 

In many cases, the settlement is a single payment for a lump sum. Sometimes, however, the creditor will accept a series of payments. 

More about settlement

Settlement is the successful outcome of a debt negotiation with your creditors. The goal is for you or a debt resolution company that works for you to get your creditor to accept less than the amount you owe as payment in full. 

It's important to know that you can only get settlements for unsecured debt like credit card balances, personal loans, and medical debt—not secured loans like auto financing.

Often, the settlement is a lump sum. You may be able to withdraw funds from savings or save money over time until you have enough to offer your creditor.

Creditors don't have to negotiate with you or offer you a settlement, but many will, especially if you can show that you're going through a financial hardship that qualifies. You're not required to accept a settlement offer from a creditor unless you agree to it. 

A successful negotiation and settlement could clear your debt for less than you owe and help you zero your balance faster than by making minimum payments. 

How does a professional debt resolution company help you get a settlement?

• A debt expert talks to you and creates a custom plan based on your income and expenses. 

• The debt resolution company sets up a dedicated account where you’ll make one affordable monthly deposit, often less than your minimum monthly payments. 

• An expert negotiator works with your creditors to reduce your debt and reach settlement agreements.

• You'll be notified whenever a settlement offer comes in. 

• If you approve the offer, you'll authorize the payment from your account. The company’s fees are also paid from this account.