American Consumer Credit Counseling Explains The Debt Settlement Process

ACCC explains the pros and cons of debt settlement and how it differs from debt management

Boston, MA – November 12, 2018

Debt Settlement ProcessDebt settlement is the process of settling debt with a creditor for less than what is owed. During this process, consumers stop paying their creditors and pay the debt settlement company instead while their accounts become delinquent. As time passes, the company tries to negotiate a debt settlement offer with the creditors in hopes of settling for a lower amount than the consumer owes. National nonprofit American Consumer Credit Counseling explains the pros and cons of debt settlement and how it differs from debt management.

“Although debt settlement can work, the risk doesn’t always pay off,” said Steve Trumble, President, and CEO of American Consumer Credit Counseling. “Creditors are not obligated to accept a lower amount than what consumers owe, and debt settlement offers no guarantees. Because it can leave you in more financial trouble than before, it’s important that consumers understand the benefits and risks.”

Due to uncertainty, debt settlement be more of a last resort. Joining a debt management program (DMP) is the safer solution. With a DMP, a credit counseling agency will help the consumer develop a budget plan to pay down their debt. They will also work to lower interest rates and make payments to creditors on the consumer’s behalf. With debt settlement, creditors may not accept the consumer’s offer. Consumers will then not only owe their original debt, but additional fines and legal fees as well.

The Balance found that consumer debt rose 3.3 percent from $3.94 trillion in August to $3.95 trillion in September. Credit card debt decreased .03 percent to $1.041 trillion but is still higher than the record of $1.02 trillion set in 2008. Although credit card debt surpassed the 2008 record, it only accounts for 26.4 percent of total debt – compared to 38 percent in 2008.

ACCC explains the pros and cons of debt settlement.


  1. Consumers stop paying their creditors.
  2. Money goes into a savings account with a debt settlement company.
  3. Potential for consumers to pay less than what they owe.


  1. Creditors can make harassing phone calls.
  2. Can lower a consumer’s credit score because they are no longer paying their debt.
  3. Creditors are not obligated to accept the debt settlement agreement.
  4. If debt is forgiven, consumers may have to pay as much as 25 percent in taxes.

ACCC is a 501(c)3 organization that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:

  • For credit counseling and student loan counseling, call 800-769-3571
  • For bankruptcy counseling, call 866-826-6924
  • For housing counseling, call 866-826-7180
  • Or visit us online at

About American Consumer Credit Counseling

American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt counseling, bankruptcy counseling, housing counseling, student loan counseling and financial education. Each month, ACCC invites consumers to participate in a poll focused on personal finance issues. The results are conveyed in the form of infographics that act as tools to educate the community on everyday consumer debt issues and problems. By learning more about financial management topics such as credit and debt management, consumers are empowered to make the best possible financial decisions to reach debt relief. As one of the nation’s leading providers of personal finance education and credit counseling services, ACCC’s certified credit advisors work with consumers to help determine the best possible debt solutions for themACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). To participate in this month’s poll, visit and for more financial management resources visit