What is debt settlement?

by Mark E. Godbey, Lawyer Referral Service Panelist

Generally, debt settlement is a process in which a company, individual attorney or law firm negotiates settlements of your debts after you pay a fee and pay into an escrow account for many months or years.  It is very important to understand that debt settlement does not stop the ability of your creditors to collect against you.  If you are being sued, please contact the settlement company and an independent attorney to review the lawsuit.  Do not assume the lawsuit is being handled by the settlement company.  Your creditors still are not being paid until the settlement amount has been reached and the settlement company has reached a settlement with the credit card company.  If you choose to enter debt settlement, it is essential that you understand how much you are paying the company and what the settlement arrangement will be.  Debt settlement has its advantages, but it is very important to understand what it can and cannot do.  It is also very important to understand that it is not guaranteed to be successful and filing bankruptcy may be a much more beneficial option.

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