Late fees and intrest!

Usually that's part of the overall settlement figure -- that you're "settling" for less than the full balance owed -- so in effect, them settling does mean they're waiving a portion of interest/fees/etc.

To clarify, because maybe you're thinking they waive all their fees and then also take settlement on just the principal balance ??? That's not going to happen.

Take your example, over the course of time yes that $50K balance may turn into $75K (although I'd estimate it would take about 6-8 years with no payments to get that high). At that point in time, if you get them to settle for 60%, that would be 60% of $75K (or $45K) that they will settle for.

So the reality is that it is probably better to settle sooner rather than later, before that account has a chance to earn so much interest.