This is an important issue as not all debts can be settled with regular debt settlement agencies. And thus, prior to hiring the services of such agencies you need to make sure that your particular debts are suitable for settlement or else you would be just wasting money.

Under the right circumstances all debt can be settled, but debt settlement agencies deal only with certain types of debt. Following is a short description of the different types of debt that qualify for a debt settlement process through an agency and those debt types that do not qualify for regular debt settlement processes and need different solutions in order to be cancelled or eliminated.

Debt Types That Qualify For Debt Settlement

The first type of debt that we will briefly explain is credit card debt. Credit card debt is in most cases unsecured debt that features high interest rates compared to other form of debts. Thus, it is extremely important to include this kind of debt in any debt settlement program. Credit card debt certainly qualifies for debt settlement due to its unsecured nature and the repayment flexibility it presents.

The same goes to store card debt. Just like credit card debt, store card debt is unsecured debt and usually charges higher interest rates than credit card debt and personal loans. Thus, it should also be included into a debt settlement program.

Personal loans, if unsecured can also qualify for debt settlement. This is due to the fact that if the lender refuses to negotiate, he would have to undertake long legal processes to recover the money and he would also be forced to negotiate prior and during the process with costly legal fees. Of course, this applies to unsecured personal loans only and not secured loans.

Different bills, like hospital bills and other services' bills can also be included in a debt settlement program. They are usually included because the debt is unsecured and because the creditor has less negotiating power than banks and other big companies. Thus, it is easier for a negotiator to convince the creditor that he should accept the deal or he might lose the chances of getting any money back at all.

Debt Types That Do Not Qualify For Debt Settlement

There are other debt types that cannot be settled. These debts include: student loans which can be consolidated, waived or forgiven but never settled. The only exceptions are certain private student loans which are not subsidized by the government or a private non-profit institution and thus are subject to the rules of any personal unsecured loan.

Mortgage loans and home equity loans are guaranteed by a property or the equity on that property and thus are not subject to negotiation because the lender can always resort to request the repossession of the property and claim all the money owed. The solution for these debts is refinancing which can modify the terms of the secured debt while keeping the security in place.

Car loans which are secured on the car are just like mortgage loans, and with only a few differences, are tied to the same rules. Just like mortgage loans, car loans can be refinanced or fully paid off with the aid of a mortgage or home equity loan. Thus, to solve a debt problem derived from a car loan your main options are debt consolidation and refinancing.

Finally, tax debts can't be settled either. There are some circumstances in which under special hardship, a debt can be forgiven by the government agency. However, these are very special situations with complex requirements. And often, they imply that the debtor has to resort to extreme measures like filing for bankruptcy.