[masraum]

If you don't pay, and you don't tell them you aren't going to pay, then they'll write it off and ding your credit, and probably sell your debt to someone that will hound you forever.

If you are tight, and call them and tell them, they will work with you on a reduced payment plan possibly even with a period of no payment, and your credit won't get dinged.

If you work out a deal, for instance you owe $50k, but you agree to pay 25k and they write off the other 25k. THey'll send a 1099 to the IRS, and the 25k that they wrote off will be like income that you have to pay taxes on.

I think those are scenarios that I've seen/heard in the past.