Debt settlement is not a new method of debt relief.
It was available even earlier, however most people did not opt for it as filing for bankruptcy was more convenient.
The recent changes in the bankruptcy laws have made filing for bankruptcy a difficult option.
Under the new law most people would not qualify for bankruptcy under chapter 7.
Also the stigma of bankruptcy remains on a customer's credit report for at least 10 years.
Debt settlement on the other hand is a simple and legal way of reducing the debt amount.
Most of the debtors can deal with their debt if the amount of the debt is reduced.
This method allows a debtor and a creditor to negotiate a reduced amount of total balance which can be considered as full payment.
A debtor benefits from this method as he can avoid bankruptcy.
The process is simple hence a customer can go ahead with the settlement by himself.
Another way to handle the process is with the help of a reputed debt settlement company.
A settlement company can help the customer convince the creditor of his financial difficulties.
Then the debtor can pay a lump sum amount of money to get a certain percentage of debt removed.
If the debtor does not have that much amount of cash available then he can take the help of the settlement company to open up an account in order to save for certain amount of time.
Any customer who has ten thousand dollars or more in unsecured debt utilise this debt relief method to come out of debt.
A customer can expect a debt reduction in the range of 40 % to 60 % of the total amount.
However a customer must remember that this method has negative effect on the customer's credit report.