Debt settlement services are alternatives if you’ve tried debt management programs but couldn’t meet the agreed monthly payments set by your debt manager, or you’re not experiencing any real debt reduction.

Perhaps you’re contemplating filing for bankruptcy, but learned that you don’t qualify for whatever reason, including exceeding the income limits.

Debt settlement companiesare services that negotiate on your behalf with creditors to an agreed final payment that you can afford, an amount that the creditors are willing to settle for. Quite often, if the creditors are aware that you’re considering filing for bankruptcy, they will even reduce some bills by as much as 50%, rather than lose their entire investment, which could happen if you file for bankruptcy protection.

Quite often, these negotiations will end in one of two ways:

• You will pay an agreed sum in full, or
• You pay a large deposit payment, then make much smaller payments per month until the agreed amount is satisfied.

Once you’ve agreed to the negotiated repayment terms, your settlement agency will need to follow up with the creditor to ensure that the settlement action is reported favorably to the various credit reporting companies, so as to not affect your credit score negatively.

These settlement agencies do charge a fee. They will require a commission based on your new payment amount, and possibly some administrative fees. Remember: this settlement alternative, even though there are some fees involved, may be the better decision compared to bankruptcy.

Bankruptcy is huge, and remains a negative mark on your credit rating for ten years! Be mindful before you use bankruptcy even as a last resort for handling your debts. It is not an easy fix, nor is it intended to wipe your slate clean. Your obligations remain just that and any assets you own can be used to liquidate your indebtedness.

One last note, sometimes creditors are not open to the settlement offers. If you continue to negotiate, delaying payments, your creditors could resort to sending in bad reports to the credit reporting agencies. Be sure your settlement company keeps you informed if this is a possibility.

©2009 GuideForDebtElimination.com