Ask A Lawyer

Tell Us Your Case Information for Fastest Lawyer Match!

Please include all relevant details from your case including where, when, and who it involoves.
Case details that can effectively describe the legal situation while also staying concise generally receive the best responses from lawyers.


By submitting this lawyer request, I confirm I have read and agree to the Consent to Receive Email, Phone, Text Messages, Terms of Use, and Privacy Policy. Information provided may not be privileged or confidential.

Understanding Debt Settlement

by Gregory Mark Fitzgerald on Feb. 12, 2016

Bankruptcy & Debt Credit & Debt 

Summary: This article covers some important information regarding the debt settlement process.

There can be a lot of confusion surrounding the debt settlement processand when you should consider using it. Debt settlement occurs when you pay a portion of what you owe to your lender rather than the full amount, but your debt is deemed to have been paid in full. If you are struggling to pay all of your past due bills but you have some funds available to pay a portion of them, it may be time to consider debt settlement.

There are a variety of debt settlement companies – some are reputable, but many are not. Thus, it is important to fully research a company before using them or, to be safe, work with a debt settlement attorney. A debt settlement company will often require you to pay a monthly amount in addition to their initial enrollment fee. The debt settlement company may hold onto the monthly payments until they reach a certain amount before dispersing payments to your creditors (if at all). They will attempt to negotiate with your creditors to settle your account for a reduced amount. However, while you are making payments to your debt settlement company and your creditors are receiving nothing, collection actions against you will continue to occur.

It should also be noted that when you settle your debt for less than what you owe, it will negatively impact your credit score. In many cases, debtors are already so delinquent on paying their debts, however, that their credit score has already been damaged and debt settlement doesn’t make it much worse.

As soon as you stop making payments to your creditors, they will report it to the credit bureaus. Your credit score will start to fall. When your creditor agrees to settle your debt and you pay the agreed upon settlement amount, it will also be reported the credit reporting bureaus.

Future potential lenders will view your credit report and see that your settled accounts were paid for a lower amount than what you originally agreed to pay. This may make them reluctant to give you a loan. At a minimum, it will impact the interest rate and loan terms that you qualify for on a new loan.

Take the first step to resolving your debt problems today by contacting us for a FREE initial consultation. The attorneys at Fitzgerald Campbellrepresent debtors all over the State of California in debt settlement, collections harassment and credit card lawsuits.  If you have a matter relating to a debt you owe, contact us today by calling 855-709-5788 for a consultation.

Legal Articles Additional Disclaimer

Lawyer.com is not a law firm and does not offer legal advice. Content posted on Lawyer.com is the sole responsibility of the person from whom such content originated and is not reviewed or commented on by Lawyer.com. The application of law to any set of facts is a highly specialized skill, practiced by lawyers and often dependent on jurisdiction. Content on the site of a legal nature may or may not be accurate for a particular state or jurisdiction and may largely depend on specific circumstances surrounding individual cases, which may or may not be consistent with your circumstances or may no longer be up-to-date to the extent that laws have changed since posting. Legal articles therefore are for review as general research and for use in helping to gauge a lawyer's expertise on a matter. If you are seeking specific legal advice, Lawyer.com recommends that you contact a lawyer to review your specific issues. See Lawyer.com's full Terms of Use for more information.