Debt settlement means a creditor has agreed to accept less than the amount you owe as full payment. It also means collectors can’t continue to hound you for the money and you don’t have to worry that you could get sued over the debt.

It sounds like a good deal, but debt settlement can be risky:   

Debt settlement can destroy your credit.   

Reaching a settlement can take a long time to accomplish — often between two to four years.   

It can be costly.

Even if you are successful at debt settlement, it can take years and you may discover you owe tax on any forgiven debt. And if you use a debt settlement company, you’ll pay fees. It is a last resort.