Debt settlement is a tool that some people may be able to use in order to reduce or eliminate the amount of debt they owe. In select circumstances, it may be an effective means of reducing credit card debt and medical obligations without going through a bankruptcy. In a debt settlement, the creditor and the individual owing the debt may agree to settle for a lesser amount than owed in full satisfaction of the debt. This is not possible in every situation, but may prove beneficial in others. The debt settlement is generally done through a lump sum payment, but may also be done through installment payments.