U.S. — A recent survey indicates that approximately 34% of respondents are unable to make the full monthly payments on all their debts. The survey also found that 44% of respondents would consider working with a company that negotiates settlements on their behalf.

Debt settlement involves a creditor agreeing to accept less than the full balance as payment. Credit card debt is often unsecured, meaning no collateral can be seized by the lender if payments cease. Credit card companies and collection agencies are frequently willing to negotiate settlements, especially if a lump-sum payment can be made after an agreement. However, waiting until a credit card account becomes seriously delinquent or charged off can damage a borrower's credit history.

Medical debt is frequently negotiable, as healthcare providers often have more flexibility than traditional lenders in collecting unpaid balances. Hospitals and physician groups may prefer to recover part of an owed amount rather than pursuing collection efforts for the full balance over an extended period. Borrowers with medical debt may inquire about financial assistance or charity care, which can reduce the balance without affecting credit.

When a debt becomes delinquent, collection agencies may purchase the debt for a reduced price or work on commission for the original creditor. For these agencies, accepting less than the full balance can still be profitable. In contrast, private student loans are typically less negotiable because lenders generally expect repayment according to the loan agreement terms. While settlement opportunities for private student loans are less common than with credit card debt, some lenders or collection agencies may accept a partial payment if a loan goes into default, determining it to be more favorable than continued collection efforts.

Auto loans and mortgages are secured by collateral. If payments stop, the lender has the legal right to repossess the vehicle or foreclose on the home. Lenders are generally less inclined to forgive part of the balance for these types of loans due to the protection provided by the collateral. Settlement for auto loans and mortgages usually occurs after the collateral has been sold and a deficiency balance remains, or through negotiated short sales. Debt settlement can negatively affect a borrower's credit score, and forgiven debt may have tax implications in certain situations.