In my view, bankruptcy is often the alternative, when all else fails to derive an affordable result, such as settlement. If you were to stop paying on this debt, it is likely that they or a debt collection agency will call you and someday sue you in court. However, as my blog posting below states, a judgment against you is NOT inevitable, and there will be plenty of opportunities to consider a settlement, even after a debt collection lawsuit has been filed. My website has so much info on options and explains the process of being sued on an unpaid debt, that it is not the "end of the world" for you. If you want to settle for less and have a hardship, I would start with a call to the company and explain the situation, to see if they will settle for less and close out your account.
Robert Stempler (please see DISCLAIMER below)
NOTICE: The above statements are provided for general information purposes only and are not intended as legal advice or advice of any sort for a specific case or legal matter. If you do not have a signed attorney-client fee agreement with the Consumer Law Office of Robert Stempler, APLC ("the Firm"), then until such written fee agreement is provided and signed by both a prospective client and attorney for a particular case, neither Mr. Stempler nor the Firm will represent you nor will they be your attorney in any matter and you remain responsible for retaining your own attorney and for compliance with any and all deadlines and for any statutes of limitations that may pertain to potential claims. Comments made on a public forum, such as Avvo.com, to not have any confidentiality because others may read them. If you desire a private consultation with Mr. Stempler that is confidential, please go to www.StopCollectionLawsuits.com and submit a free eCase Review.
We handle debt settlements with major banks on a daily basis. Simply because you were personally not successful at it does not mean banks do not settle. To answer your other question, there are usually two ways a creditor can go after your assets: 1) if you have a bank account with that creditor, they can reach into that account to take money out to satisfy the debt; or, 2) if they get a judgment against you that they can then enforce against you to go after your assets (which means they have sued you and you didn't respond or lost at trial and then a judgment is entered against you.) The best way to try to settle the debt is to talk to a debt settlement attorney who can help negotiate a reduction in the debt and work out a payment plan that you can afford. It is better to deal with the issue now, rather than wait until you get sued.
I would strongly advise against using a debt settlement company. Often, you will end up in a worse position than when you started. Program fees are often front-loaded, meaning your money won't even go towards settling you debt until the fees are paid first. If you absolutely must go with a debt settlement firm, rather than BK, find one that will only take their fees AFTER your account is settled. Otherwise, try calling a few more times. Sometimes, it takes a different representative, on a different day, to provide you the assistance you need.