Why Can't Some Debts Be Settled?

Secured debts and guaranteed debts usually cannot be settled.  The reason for this is that creditors who are secured or guaranteed lack any motivation to settle for less than 100 cents on the dollar.

If a debtor defaults, the secured lender expects to recover the full amount due by seizing and selling the collateral that secured the loan.

If there is a shortfall the remaining amount due becomes unsecured debt, which most lenders will then negotiate to settle.  An example of this is an automobile that is repossessed but cannot be resold for the full loan amount due, creating a deficiency balance that is unsecured.

If a debtor defaults, a guaranteed lender looks to the guarantor to repay the balance due in full such as student loans and the Federal Government, or auto loans with a cosigner.