When one has huge outstanding debts and the the lenders on your necks, there aren't many options left.
You can pay off your debts in full or you can pay a reduced amount of your debt which can be obtained through settlement and negotiation.
Many people are always worried about how these different options affect their credit history.
When you are unable to pay back your credit score suffers badly with a not paid listed in it.
Options like settlement debt consolidation, settlement, credit counseling all have almost similar effect on the credit report although they work differently.
Using these debt relief options you might be able to pay off your renegotiated debt.
However your creditors might mark that you paid the debt but also mention that you paid a lesser amount.
This will also serve as a warning to future lenders that they might not be able to recover all their money from you.
thus paying off using settlement is only slightly better than not paying back at all.
Still it remains a much better option in other respects.
If you can manage to get just a "paid" on the credit list then situation might be somewhat better.
When people think of bankruptcy as an option they must realize that it may have the worst effect on your credit card of all the options.
For almost 7-10 years it stays on your credit score making it very difficult for to obtain a loan or credit card during that time period.
Thus avoid bankruptcy until the very last because you have a chance to salvage some of your credit score through settlement.
Credit counseling and consolidation have an almost similar effect on credit report.