You’ve got a mountain of credit card or other unsecured debt, and there’s no way you can get out from under it by yourself. You need help and a financial strategy, and you need it now. You’ve been weighing your options, including debt settlement. But is debt settlement right for you? Well, let’s see.

What is Debt Settlement?

Also called debt relief, debt settlement is when you hire a company such as Freedom Debt Relief to go to your creditors on your behalf to see if they will agree to let you pay just a portion of what you owe to satisfy your debts. Creditors usually go along with this one-time payment in full deal because they know that a bankruptcy filing will likely net them zero.

How Does Debt Settlement Work?

Trained professionals at the debt settlement company will assess your financial situation and carve out a plan that suits you, depending on your debt load and ability to pay. Rather than pay creditors directly, you’ll deposit funds monthly into an escrow-like account that you control. When each account is settled and approved by you, the creditor will be paid from that account.

Your debt can often be reduced by half, and sometimes even less.

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How Long Does Debt Settlement Take?

Anywhere from two to four years – much less than it would if you were to continue to make minimum payments. Your first settlement likely will come within a few months of joining the program.

Will Debt Settlement Hurt My Credit?

The process does -- but only temporarily. After you’re done with the program your scores will rebound nicely. But don’t just take out word for it, check out Freedom Debt Relief reviews.

Keep in mind that your scores are already down, and that should you file bankruptcy, that will be noted on your credit report for up to 10 years.

Is Debt Settlement Right for Me?

You’re a prime candidate if you have several skipped or late payments, or collections accounts. Note that a creditor likely won’t settle with you if it believes you can pay the whole debt.

You may also be a good candidate if you’ve considered bankruptcy or have attempted to manage your debt on your own, but you can’t seem to make progress.

How to Avoid Scam Companies

Most debt relief companies are above board, but the industry does indeed have some bad actors that you need to be on guard for. 

First off, never sign on with a firm that asks for money off the rip – before it has settled a single debt. That is illegal and a sign that the company is likely looking to pull one over on you. Get far away.

Also, don’t do business with companies that “guarantee” it can get you out of a jam, even before it goes over your finances. While debt settlement is a proven strategy, no company can promise that negotiations will be successful or that you’ll be able to save a certain amount by a certain date. These people just want your money.

You should also give the bum’s rush to any company that refuses to provide you with info about its services unless you give it financial data such as credit card account numbers and amounts owed.

So, is debt settlement right for you? You should have a better handle on that now. We do know that the financial solution has helped scores of people back on their feet. Make sure you do your homework and get an established, reputable company to help you.