Debt settlement or debt consolidation means that you will engage in direct negotiation with each of your individual creditors to reduce the amount of debt you owe to each of them. The payment arrangement is completely voluntary and either party can cancel the agreement at any time. This process seems simple enough, but debt settlement outside of bankruptcy contains many pitfalls.
Mortgage arrears, car payments, tax debt, and child support arrears are usually not included in debt consolidation payment plan programs You can find protection from all of your creditors by filing a Chapter 13 bankruptcy and consolidate your debt into one monthly payment. Chapter 13 plans spread over 3 to 5 years.
At the completion of the bankruptcy filing all dischargeable debts are eliminated. There is a possibility that traditional consolidation plans could drag on for years without significantly lowering the balances.