So you’ve seen the advertisements that offer to cut your debt in half through debt negotiation with your creditors and you want to know whether debt settlement could help cut your credit card debt to a manageable amount.

The Benefits of Debt Settlement

If you are behind on your payments or have amassed more debt than you can hope to pay off, debt settlement is a tempting alternative to bankruptcy. After a period of negotiation in which you prove that you are unable to pay your debts, the creditor should be willing to accept less money up front in order to avoid the lengthy collection and bankruptcy process.

Why doesn’t everyone participate in a debt settlement program?

Since the benefits of debt settlement sound too good to be true, there are of course drawbacks. Debt settlement companies may charge both up front and monthly fees. And in some cases, they have simply taken the money and run.

While the companies are engaged in negotiation over the amount of debt that you owe, you may rack up penalties and interest that make the ultimate amount owed more than when you started the process.

In addition to the cost for debt settlement, you will also pay later. You’ll owe income taxes on the amount of debt forgiven (as long as it is $600 or more), and your credit score may be harmed because you did not pay your debt in full.

Your credit card company may also decide not to accept a lesser amount or refuse to work with your debt settlement provider. They publicly claim not to work with any debt settlement services, though the truth of that claim remains to be seen. The credit card companies contend that you can get a better deal by simply calling them up and telling them you are having problems.

Debt Settlement Links

If you have questions about whether debt settlement is right for your situation or are interested in pursuing debt settlement, then check out the following websites which offer a consultation about the process and claim to have settled more than $100 million in debt:

Credit Solutions - Credit Solutions offers a free debt consultation for those interested in debt settlement. They have settled over $350 million in the last 12 months and over $900 million since it was started in 2003.

Curadebt - Curadebt offers a free debt analysis online for those interested in debt settlement. They have been providing debt settlement services since their founding in 1996, and have settled over $100 million in consumer and business debt.