More than a million people file Chapter 7 bankruptcy every year, and in all of those cases, credit card companies receive nothing. Because they know that Chapter 7 bankruptcy is a very real alternative for many of their debtors, creditors have a big incentive to reach a settlement whereby they will receive at least a partial repayment of the debt.

In most cases, debts are “aged” during debt settlement, which means that no payments are made on the account for the duration of the program. It’s also likely that the debt is already aged by the time an individual begins to pursue debt settlement. The credit card companies look at their statistical models, and they realize that as accounts age further, from 60 days to 90 days to 180 days, there’s a higher and higher probability that the individual will file bankruptcy. So the more the account ages, the more motivated the creditor becomes to cut you a deal. From their perspective, getting some money now – whether it’s 30, 40, or 50 cents on the dollar – is better than getting none at all.