Debt Settlement


What is debt settlement?

Debt Settlement allows you to negotiate with creditors to pay off debt on delinquent, unsecured credit accounts and personal loans over a specified time (or all at once) for an amount less than what you owe. For example, a person with a Chase credit card with a $10,000 balance might only be able to pay $4,000 to close and “settle” the account and have the remaining $6,000 forgiven.

30 - 60 Days

Settlement Length

Up to 70%

Debt Balance Reduction

15% of Savings



  • You’ll likely pay less and get out of debt faster.
  • If you’ve missed payments with your creditor, and are in collections, settling will eventually help your credit.
  • It can improve your financial situation.
  • It can help you avoid being sued if you’re already in collections.
  • It can help you move on to accomplish other financial goals as you can apply for credit cards, loans, and mortgages right after your last settlement payment.


  • You must have the money to pay off the debt at the negotiated amount.
  • Your credit score temporarily drops, if it has not already, due to late payments.
  • Taxes may apply to the amount of debt forgiven in your settlements.
  • Once you’re committed to a Debt Settlement Agreement, you can’t miss a scheduled payment as you’ll risk nullifying the agreement.
  • Your account will be subjected to internal/external collections, which could include being sued.


How can I unenroll from my debt settlement company?

If you are currently enrolled with a debt settlement company and you would like to end your relationship with them,…

5 Steps To Rebuild Credit After Debt Settlement

A settled debt is better than an unpaid, past-due one on your credit report, but settling a debt can often…

Portfolio Recovery Associates: What You Need to Know

Portfolio Recovery Associates (PRA) is one of the largest debt collectors, and has been in business for 23 years. It…

Debt settlement risks & alternatives​

Debt Settlement may or may not be the right option for you. You need to consider the risks, including that you are still liable to be sued and if you miss a payment you may be back at square one. It is wise to consider how it impacts your credit and that you may owe taxes on the amount of debt forgiven on your accounts.

We recommend consulting a tax attorney or tax adviser for specific information. Here are some things to consider regarding the potential impact on taxes:

  • Not everyone will owe tax on their settlements.
  • If you have a debt that is settled for less than the original balance, and the difference, i.e., the forgiven portion of the debt, is greater than $600.00, you’ll need report this as income and you should receive a 1099c tax form from your creditor.
  • Remember, if you end up owing taxes, it’is because you saved money. So, you’ll want to keep that in perspective.
  • Just as you set aside funds to use for settlements, if you’re solvent and owe tax on forgiven debt, you must also set aside funds to pay the taxes.

When it comes to your credit report, there are pros and cons to debt settlement. Creditors will actually not settle with you unless you are late with payments. These late payments have a negative impact on your credit score. In fact, on-time payment history is roughly 30% of how your credit score is factored. It’s likely, however, that you’re considering debt settlement because you’re already late on at least some of your accounts. As this is already impacting your credit score, settling your accounts can help your credit heal and your score recover.

If debt settlement is not the right choice for you, some alternatives you may consider are debt management, bankruptcy and debt consolidation.


How does debt settlement work?

  1. If you’re at least 90 days late in paying on an unsecured debt, you can negotiate a settlement with the creditor.
  2. To do this, you or your representative (e.g., a financial management service like Resolve) contact your creditor (or their representative, such as a collection agency or collection lawyer) to begin the process.
  3. You or your representative negotiate to pay less than your current balance and agree to a one-time payment or payment schedule.
  4. If you work with Resolve, we create a Debt Settlement Plan based on your budget and needs, including an outline and estimate of:
    • what your settlement(s) will cost
    • how long the settlement plan(s) will take to complete
    • when you should target certain creditors
    • our service fee
  5. You review the plan and we answer any questions you may have.
  6. When you’re ready to proceed, we negotiate with your creditors. If you have multiple unsecured credit accounts that are past due, Resolve can help you negotiate amounts and timelines that fit your ability to pay and also pay off creditors in an order that saves you the most money and reduces your risks.
  7. Creditors will often base their agreed settlement amount upon how delinquent your account is, how long you’ve had the account, and how collectable you look on paper (i.e., whether you appear to be managing at least some of your debts well).
  8. Once we receive the terms from your creditors, we update the Debt Settlement Plan for your review. We present each offer with a comparison to the plan, a recommendation, and the fee to settle using our partners before you commit to a final plan.
  9. Once you commit to your Debt Settlement Agreement it cannot be altered.
  10. You must adhere to the terms of the agreement or your debt may not be resolved. For example, missing a scheduled payment may nullify the agreement.

Frequently Asked Questions

What is Debt Settlement?

Debt Settlement is the process of paying off your debts…

How does Debt Settlement work?

Debt Settlement is a negotiation between you (or your representative)…

Why are creditors willing to settle?

It is an accepted business practice for creditors to take…

What is a debt settlement agreement?

The debt settlement agreement is the settlement contract between you and your creditor that includes all of the critical details you have both agreed upon, i.e., settlement amount, payment plan and date(s), involved parties, etc. If you negotiate your settlement plans yourself, you can use a debt settlement agreement template to create this binding document. You will need a separate agreement for each creditor.

Debt settlement companies & programs

There are a lot of traditional debt settlement companies and not all have your best interest in mind. We’re not fans of the high fees charged for most of their programs. We’ve also found that many negotiate your accounts in an order that gets them paid faster rather than saving you the most money.

The FTC provides guidance for selecting a debt settlement company. You can start by checking out the company with your state Attorney General and local consumer protection agency. The FTC cautions against using any company that:

  • charges any fees before it settles your debts
  • touts a “new government program” to bail out personal credit card debt
  • guarantees it can make your unsecured debt go away
  • tells you to stop communicating with your creditors, but doesn’t explain the serious consequences
  • tells you it can stop all debt collection calls and lawsuits
  • guarantees that your unsecured debts can be paid off for pennies on the dollar


Debt Settlement Agreement — Build the contract for your settlement documenting the criteria you negotiate with your creditor.

Credit Dispute Letter – Draft a letter to dispute information on your credit report.

Debt Settlement Calculator – Determine how much you might save with a debt settlement.

Debt Consolidation Calculator – Assess if debt consolidation is a viable option for you. Credit Card Payment Calculator – Discover how long it will take to pay off your current credit card balance.

Why Resolve?

While you can negotiate with creditors directly, you’ll have to do your own research. You can calculate what you might save with a debt settlement calculator and then use a debt consolidation calculator to assess if this is a viable option for you instead. You can also use a credit card payment calculator to assess how long it will take to pay off your credit card(s) if you don’t choose a settlement plan. You may find it challenging to determine the best deal possible for your situation. That’s where Resolve comes in. Our primary goal is to assess your personal situation and understand your legitimate options. We’re really good at that.What’s more, we offer an alternative to debt settlement companies that charge high fees and prioritize getting themselves paid. Our solution prioritizes saving you the most money. In fact, the Resolve platform and debt guidance are free. You can review and compare debt relief paths and ask our experts questions. And you can get debt settlement estimates and a settlement plan. All for free.There is no cost to you unless you decide to work with one of our Resolve Network Partners. Our partners can help you achieve your goals and may be able to help you avoid debt settlement. And, their fee structure is completely different from those of the debt settlement companies, which results in more savings for you.For example:
  • If your debt is $30,000, your fee with the typical debt settlement company would be 20-25% of your debt total, meaning you’d pay a fee between $6,000 and $7,500 regardless of how much the company saved you in settling your debts.
  • Your fees for that same service using the Resolve platform are 15% of of your total savings. What that means: Assume all of your accounts settle for a total of $14,000 on that $30,000 debt. You saved $16,000, so  you’d pay just 15% of that amount in fees, or $2,400. Basing our fee on results means you’re never paying higher fees for less value.
If you haven’t yet created a Resolve account, click here to get started.

We use bank-level security with 2048-bit SSL encryption and will never share your info without your consent


HelloResolve, Inc. is an accredited company with the Better Business Bureau


We were selected as a winner of the prestigious CFSI Financial Solutions Lab by J.P. Morgan Chase

Copyright © 2019 HelloResolve, Inc. All rights reserved