Debt settlement is one solution to reducing your outstanding debt.
It is a program for people who can't afford the payments, can't even make the minimum payments, can't borrow to pay off the debt, and don't want to file for bankruptcy.
With debt settlement, either you or a third party will negotiate a settlement with creditors to lower payments and reduce the total amount of outstanding debt.
Most creditors won't agree to settlement until you are at least 120 days past due.
So if you are way behind in payments, then debt settlement should be considered as a possible solution.
Your payments will be reduced, your total outstanding debt could be reduced and you could be out of debt in 24 - 36 months.
One disadvantage is that it will negatively impact your credit score.
However, if you already behind in payments, then your credit score is already damaged and that disadvantage become irrelevant and is less damaging the bankruptcy.
There is no such thing as a free lunch.
Debt settlement is no different as these companies will charge a fee for their service.
The industry standard is about 15%.
For example, if you have $10,000 of debt to settle, then the fees would be $1500.
You have to weigh the benefits to see if the amount of debt to be settled is more than the fees you will be charged.
You may not a have choice if you are so delinquent that you can't qualify for a consolidation loan or you don't have the financial resources to get yourself out of debt.
Debt settlement is designed to get you out of debt quickly so you will be in a position to start reestablishing your credit.
But, there are a lot of scams out there so you must be careful.
If you want to enlist the help of a debt company, make sure you are dealing with a legitimate debt settlement company and know what the fees and costs are up front.
The longer you wait, the more fees and penalties accumulate.
Act quickly but at the same time do the research or find a service that can find legitimate debt settlement companies for you.
It's better than bankruptcy!