There are numerous options for slow and steady debt reduction and debt consolidation these days. And most of those are good options with little risk and good reward as long as you steer clear of disreputable credit counseling companies that are out to take advantage of you. The one area that has a higher risk and a greater return is the debt settlement option. It is managed by debt settlement companies that negotiate a settlement plan with your creditor for less than the balance owed. You are then allowed to discontinue payments to the creditor while you save to make that lump sum payment. Once that creditor is paid off, the account is listed as settled and you are on your way to restoring your credit score. But most creditors won't consider this option unless you're seriously behind in your payments. In addition, many debt settlement companies are less than reliable, charging high fees and often not following through on the plan. In addition, you may be required to pay income tax on the amount that is "written off," if it is more than $600 and unless you are still insolvent.