Debt Settlement is the legal process of getting your creditors to accept less money than you owe them for your unsecured debts or it can be said that debt settlement is typically only an option for unsecured debt.

Pros of debt settlement:

1. You don't have to pay the whole amount of your debt. Debt settlement will cut your payments dramatically
2. You can avoid bankruptcy
3. You will get debt free faster.

Cons of debt settlement:

1. You have to pay taxes on savings.
2. You need to pay to debt settlement company.
3. Your credit score will suffer.
4. You have to be behind for debt settlement to work.

Debt settlement and taxes

If the amount of settled debt is more than $600 you have to pay tax on it. You dont have to pay tax on it if you are insolvet, meaning your debt is bigger than your assets. You can only exclude the amount of debt by which you are insolvent.

How to validate debt settlement company?

1. Do Not go directly to a particular debt settlement company but rather first go to a debt relief network who is affiliated with several legitimate debt companies.
2. Check the popularity soaring of a company to ensure that the debt reduction company is certified and legitimate.
3. Check forums to establish whether your company is legitimate and certified
4. Establish a search of the firm to validate its licenses and legitimate.

What is considered to be a good settlement percentage ?

There is no definite answer, but usually around 30-40%