In the past several years, medical debt has become more burdensome for many families. So much so that medical bills have become a major cause of personal bankruptcy. It’s not that people have no health insurance. Many individuals who cite medical debt as the cause of their bankruptcy were actually covered under a health insurance plan at the time the medical expenses were incurred. The problem is that certain medical expenses are often uncovered. Debt settlement may be an alternative to bankruptcy for dealing with your medical expenses.

Everyone, it seems through mass media coverage, knows how to dispute negative credit listings on your credit report. This is a good thing. However, many people are foiled in their disputes because of the way the credit bureaus “investigate” the disputes.

Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.

So you have some extra money in your pocket and you’ve decided to pay off one of your credit card collections early. You know that credit scores are extremely important so your goal is to pay off the collection that will yield the most credit score improvement — the “FICO ROI” (return on investment).

Debt settlements are where the debt collection agency or creditor agrees to take a lesser amount than what is actually owed in order to eliminate the debt. It is very useful for paying off old debts for less money than what is owed and can save hundreds of dollars when it comes to paying off the debt.