What you need to know about debt settlement firms:

Your credit card companies are not going to offer you settlements like 50%, for example, if you are current (not behind) on your payments. If credit card companies offered settlements to people who are current on their payments, then everyone would be calling them up and asking for 50% settlements. Basically, the only way you can get into a position to negotiate settlements is to deliberately let your accounts go into default. This is exactly what debt settlement firms do....They take a monthly amount from you and use that to build a “settlement” account, which will go towards paying the “settlement” at a certain date. Your creditors will deliberately not be paid and they will not be happy about this.

• If you are current on your accounts, this process will ruin your credit rating as your accounts will all go into default.
• Your creditors are under no obligation whatsoever to accept settlements from any debt settlement firm you hire. Their response might be to serve you papers and take you to court.

Debt settlement "can" be a viable alternative to filing for BK....you just need to be aware that if you currently have good credit...the debt settlement firms will deliberately let all your accounts charge-off/default to put them into a position to negotiate settlements. It can be a stressful and unpredictable process....As your accounts all go into default...you will get increasingly aggressive collection calls from debt collectors. It is "typical" that creditors offer settlements for defaulted credit card debt....They often do this in lieu of loosing everything if you file for BK.....

HOWEVER, you can never predict how any one creditor will respond to defaulted debt. They might decide to take you to court and get a judgment against you. Debt settlement firms have no power whatsoever to stop creditors from taking this action and they have no power to force creditors to accept settlements.

****If you have already defaulted on your cards....make your own settlement offers...you can do this on your own and it puts you in control. If you do...get all settlement terms IN WRITING PRIOR to paying them.

If you are NOT in default on your credit cards, the debt settlement process will ruin your credit and there’s no guarantee that your creditors will accept settlements. It can be an unpredictable and risky process.