There are two types of debt the secured and unsecured loan.
The secured loan are the for which you have to provide collateral to the bank.
The creditor can settle the outstanding debt by selling your collateral.
The unsecured loan is the debt in which creditors do not take any collateral but the interest rate charged is very high.
The unsecured debts can be eliminated easily due to lack of authority for the creditor to recover their money.
This brings the negotiation part.
If you are not willing to pay the entire amount then creditor cannot do much legally to recover their money.
In secured debt if you file for bankruptcy creditor still have option to auction your collateral and recover their cost.
This part is missing in the unsecured debt.
The creditors also lose their money if you file the bankruptcy.
Now creditor are willing to recover the money less than what you have as debt.
All this gave birth to the consumer settlements.
Consumer settlements are the debt reduction initiatives taken by your creditor so that you can pay the reduced debt and clear all your outstanding balance.
To get the consumer settlement you should have minimum of ten thousand dollars as unsecured debt.
Once creditor finds that you are not able to pay back or you may file the bankruptcy they will start the settlement process.
The process is a legal process.
The drawback of the process is that it reduces your credit rating to some extent.
But anyhow that will happen if you do not pay the outstanding debt.
You should ask for the consolidated debt before starting the settlement.
This will help you to clear all your debt in one settlement.
Presently the market is full of debt relief firms.
You can take hire any legitimate and trustworthy firms to negotiate on your behalf with your creditor.
Check the relief network to find out the legitimate relief firms.
The relief network is the trusted and lists only the genuine firms.
The fraud relief firm will run with your money and leaving you in more trouble.