Creditors are likely to negotiate with a lump sum payment. If you only have one credit card with a collection firm and you have money in the bank, this could be ideal for you, depending on the terms of the settlement. Settlements can effect your credit report in different ways. Review the guidelines on credit karma or one of the three main credit report agencies. Debt forgiven is also taxable. You will receive a 1099-C. If you have more than one or two credit cards in collection, you run the risk of getting stuck with a musical chair down the road, in other words, if one credit card will not negotiate with you, you will be stuck and bankruptcy may be the best option. Always have an attorney draw up any negotiate terms and settlements for you.