When you sign up with a debt settlement firm, the program involves deliberately ceasing payments to all your creditors to force your accounts into default to attempt settlements for less. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating. You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.

Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court.

If you’re going to debt debt settlement anyway…then do it yourself…you don’t have to pay anyone to destroy your credit rating to attempt settlements…You can do this for free by stopping payments to all creditors and forcing the accounts into default. Save the money to build a fund to settle the accounts in the future. If the process works…you can settle for 25 – 50%…If the process fails…say hello to court judgements, frozen bank accounts and wage garnishment.

A better option may be to enter a debt management plan through a non profit credit counseling firm like CCCS. They can negotiate reduced payments and interest but NOT settlements. Contact your local Red Cross or use this site for a referral: http://www.nfcc.org If your debt is still out of control after trying CCCS, then you may consider filing for Chapter 7.Be VERY leary of any company that claims to do Debt SETTLEMENT. In most cases trying to do a Settlement will end you up in worse shape, especially if you are current on your accounts.

What Debt Settlement does is have you intentionally stop paying your creditors. Instead you pay the company a set amount each month. In this payment they take out some of their fees and put the remainder in an account. When your account has enough money they will attempt to negotiate a lump sum payment to settle the debt.

Unfortunately, there is no law that says creditors must settle. In fact once they find out you are with a Settlement company, creditors will often go right to filing a suit against you. When that happens it is pretty hard to defend yourself when you intentionally stopped paying the creditor. You will also find that most settlement companies will not provide you a lawyer to defend yourself in court.

Now, does debt settlement work for some people in some cases..Yes. But the chances that it will not work are just as good of not better that it won’t.

You may actually want to look at a Debt MANAGEMENT program. Here you still make a single payment, but they disperse your money on a monthly basis. As a result the creditors will often reduce or totally eliminate the interest while you are on the program. For this you may want to check out the National Foundation of Credit Counselors.Many companies are out there but it is about choosing whom you are comfortable with. As people have stated above you can handle debt settlement on your own but many people get overwhelmed with the amount of responsibility they have to oversee as well as their day to day lives.

We here at RAM Financial are about trying to get you on the path from Debt2Prosperity which means getting you out of debt in 3 Easy Steps.

1. You Must Really Want to Get Out of Debt. Make the Commitment to Yourself to be Debt Free for 2010!
2. Find right plan to guide yourself out of debt! We will help you decide the right path!
3. Begin down the path to financial freedom by sticking with the plan you have selected!

It really starts with you though once you know that you really want to get out of debt give us a call at 1 866 726 2122 or visit or website at http://www.calltheram.com for more information.

Hope this helps!!I have met similar situation before.From my own experience,I would like to suggest you to get your debt cleared as early as possible,before it becomes a hard handle large snowball,here

http://www.DebtFreetips.info

is the resource that help me a lot.

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