What Is A Debt Reduction Settlement?

A Debt Reduction Settlement is a process used by both debtors and creditors to settle a debt for less than what is owed. The process may also be referred to as Third Party Debt Negotiation. If negotiated properly on behalf of the debtor it can quickly and dramatically reduce the debtor's debt. Settlements typically range from 20% to 80% of the current debt, with the typical overall savings being about 50%. Most creditors offer a special repayment plan to their customers who undergo financial hardship and enroll in a Debt Management Program provided through an established nonprofit consumer credit counseling agency.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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