Debt settlement often sounds like an attractive option. Especially when you sit down and figure out how much you are being charged in interest each month. One problem with debt settlement is that it can damage your credit report for quite a long time. Another problem is that you have to come up with quite a bit of money in a short period of time.
However, settling with your creditors can be a valuable tool in certain situations. For instance, if you make too much money for a Chapter 7 bankruptcy and do not want to file Chapter 13 bankruptcy, then you can try to do a settlement with some or all of your unsecured creditors. However, bankruptcy is often a better alternative.