Debt settlement is a financial process where a person negotiates with creditors to reduce the total amount of debt owed. This often involves making a lump-sum payment that is less than the full balance, allowing the debtor to pay off their debt more quickly and at a lower cost. Typically, individuals seeking debt settlement may work with a debt settlement company that specializes in negotiating with creditors. While this can provide relief, it may also impact the debtor's credit score and could have tax implications, as forgiven debt might be considered taxable income.