What is debt settlement?

Before choosing debt settlement as a way to get out from under an overwhelming debt load, you must first understand what debt settlement is and if it is the right choice for you. In short-debt settlement is a debt reduction option available to people who have a high level of debt (normally $10,000 or more) and have already or are on the verge of not being able to make even the minimum payments. If you no longer have the ability to repay your debt and other debt reduction options such as credit counseling or debt consolidation are no longer attainable options to consider, debt settlement may save you from bankruptcy attorney fees. You can find a detailed explanation of how the process works here, but the gist of the process involves “banking” money to use in future settlements or negotiations with creditors. Unfortunately in most cases in order to bank money and put yourself in a position to negotiate your debt you will have to stop making payments on your accounts which will have negative effects on your credit score in addition to the emotional stress of dealing with debt collection tactics as you default on your accounts.  Read the complete article >

Credit Counseling or Debt Settlement?

You’ve seen the ads: credit counseling companies say they can help by getting your payments and interest rates lowered. Others claim they can get your debts wiped out entirely by settling them for pennies on the dollar. Money reporter Stacy Johnson takes an inside look at these companies.