Debt settlement deals are increasing and are expected to increase pretty massively in the year 2011. This is because of the fact that the creditors are now pretty open to debt settlement deals. The reason why the creditors are open now is that the federal government came up with a couple of supply side policies. These are discussed below:

Stimulus cash:

When the creditors accept settlement deals, they incur a loss. The loss is attributed to the principal amount of the money that they loaned out to the consumers. As a part of the entire outstanding is forgiven, a part of the principal money is lost. This is a loss for the creditors. When the creditors agree to more and more settlement offers, the total amount of loss incurred by the creditors increase massively. This gigantic loss leads to a breakdown of the financial equilibrium. The creditors then fail to cover their costs. The government release stimulus cash in the economy and allowed the creditors who agree for settlement offers to use the money to cover their costs. It is because of this financial aid that the creditors are readily agreeing to settlement offers and this helped in increasing the number of settlement deals.

Creditor's tax breaks:

Because of settlement, the creditors also lose their interest earning. Their income levels fall. They fail to cover their corporate liabilities. They fail to pay their corporate taxes. It is because of this, the government decided to reduce the tax burden for those creditors who agree for settlement. This helped the creditors more and they simply started accepting the offers made by the consumers knowing that there will be government aid available in terms of reduced taxes.

These explain why the debt settlement deals are steadily increasing and continue to increase in the year 2011.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement.