With debt consolidation, you pay back all of your debt balances.  With debt settlement, you pay back a lower amount, with the credit card company dropping the remaining balance.  Debt consolidation is usually done through a lower interst rate personal loan.  That way you are not accumulating so much interest, and, depending on how many cards or debts you are consolidating, you will probably have a lower monthly payment.  Debt settlement is done through the negotiation of terms between a layer and the credit card companies.  Typically, a layer can get your debt settled to about half.  Not only does this release the burden of paying off all of the debt that you owe, but it should relieve you of all contact for collection agencies.  Debt settlement is an option only for people who are behind on their monthly payments or are overtheir balance.  It is basically the last choice before having to file bankruptcy.