“Settling” with a creditor is *tantamount* to not paying the debt and having the creditor write the debt off. A friend, who received poor advice, settled with a creditor (she paid off others and is now totally debt free) and was told when she went to look for an apartment (after selling her home) that her credit was very poor – due the settlement.
It is viewed as by potential creditors, landlords, employers, etc. as worse than a bankruptcy. Their viewpoint is that you were extended credit and reneged. Most bankruptcies are usually because of catastrophic situations, and are viewed much more benignly (relatively speaking) than settlements. Sometimes your last resort is to to opt for online payday loans (no credit check) and pay the most urgent bill.
Please be sure to get good advice – perhaps calling a loan officer or branch manager – or even a credit reporting agency to educate yourself on the ramifications of your financial decisions. Of course, Dave Ramsey, Suze Orman and Clark Howard all have books, websites and radio shows that can be a resource for you.
Best of luck.