Debt Settlement Services

Debt settlement remains on a credit report for seven years. Settling an account for less than the full balance owed is considered potentially negative, as it implies that a debtor did not repay the entire debt as stipulated under the terms of the original contract. Though large settlements will have a proportionate negative impact upon a credit score and profile, it is possible that the settlement of small balances will have a negligible negative effect, particularly when an individual is current on other larger loans.

A written debt settlement proposal letter should be both formal and clear – it must include all identifying information related to your name, address, account number and balance owed, so that a creditor can quickly access your account and cross-reference it with your letter. The letter should describe the circumstances that prevent you from paying in full, along with an offer to pay a specified amount upon acceptance of the offer.

Negotiating debt settlement yourself can be a lengthy process, but it is something that you should try to complete as quickly as possible. The key to effective debt settlement is possessing the financial ability to settle. Therefore, if you have the means, you should begin saving for an eventual lump sum payment or structured payment schedule that can be completed within two years from initiation. Either you or a settlement company must assess your financial situation and determine how much you can save each month toward your eventual settlement. A good settlement company will approximate how much you will ultimately need following a specific review of your creditors and a determination as to which of them may be potentially legally aggressive. You also must generate a hierarchy of creditors – who to settle with first, and at what percentage – followed by the next creditor and percentage, and so forth, through your entire sequence of creditors. You also must manage all communications with your creditors. Accordingly, you must formulate a strategy of how to best submit settlement offers that paint your situation in the most advantageous possible light and that provides creditors with proper incentive to settle with you.

Yes, debt settlement programs can hurt your credit since you stop making payments during negotiations. However, for many, it’s a short-term disadvantage that supports long-term financial success.  Since debt settlement often follows a period of several months of non-payment on accounts, any delinquencies will have already impacted a score negatively. Ironically, when debt settlement is made on accounts in good standing, a credit score will be more negatively impacted, since there haven’t been any black marks that have previously weakened the score. Credit scores are designed to measure an individual’s ability to pay debt balances back in full, and since debt settlement implies an inability to pay balances back in full, it makes sense that debt settlement will have a negative impact on a credit score, particularly when larger settlement amounts are involved.

The question of which is better, debt consolidation or debt settlement, is completely dependent upon circumstances. Debt settlement makes more sense when dealing with accounts that are already seriously delinquent – in these instances, much of the damage to a credit score has already been incurred, and although a debt settlement will remain on a credit report for seven years, the prospect of paying less than the full amount owed could be worth the stain, particularly when the account is no longer in good standing. Debt Consolidation makes sense for individuals who can simplify the repayment process by paying off a number of balances through the proceeds of a debt consolidation loan that is often taken out an overall lower blended interest rate, thereby saving money on interest expense while also usually lowering the monthly payment.

A debt settlement program is a structured plan where a company negotiates with your creditors to accept less than the full balance on eligible unsecured accounts. You make one monthly deposit into a specific account that will be used to pay off your balances when a settlement is reached. 

By negotiating reduced balances, a debt settlement service may help you pay less overall. However, results vary based on your financial hardship, ability to make regular deposits, and creditor participation. 

Programs typically last 24–48 months, depending on total debt and monthly deposit amounts. A projected timeline is provided during your consultation and updated throughout the program.

Debt settlement may be a good choice if you have significant unsecured debt, are facing a hardship, and want to avoid bankruptcy. It provides a structured approach to becoming debt-free, often at a lower overall cost and with the help of professionals.

Many people find that debt settlement is worth it, especially when high interest and late fees make progress feel impossible. The process provides a clear path to resolution, reduced stress, and one predictable monthly deposit. 

Typical candidates for debt settlement services include individuals with unsecured debts, such as credit card or medical bills, who are facing financial hardship but can make a consistent monthly payment. 

United Settlement only charges fees after a successful settlement has been negotiated and approved by you. All fees are disclosed in writing before enrollment, so you always understand costs before any payment is made.