Debt settlement involves offering a large one-time payment that is less than the total owed in exchange for the creditor forgiving the remaining balance. For example, someone who owes $20,000 may offer $15,000 to settle the debt. While debt settlement can eliminate monthly payments and reduce total debt, it typically lowers the consumer's credit score since it appears on their credit report, making it difficult to qualify for new loans. Professional organizations can help consumers negotiate and manage the debt settlement process.