How does debt settlement work?

Debt settlement, which refers to reaching an agreement with your creditors in which they agree to accept less than the full amount you owe on the debt, is generally done through an attorney or a qualified debt settlement firm. What happens is that your attorney works with your creditors to negotiate a settlement amount, usually to be paid in a lump sum or monthly installments (or a combination of the two). Rather than paying your creditors directly, you make payments to your attorney, who puts the funds in a trust account until enough has been accumulated to pay off the reduced settlement amounts that your creditors have agreed to accept.