Unemployment rates are continuing to go up. Salaries for those who do have jobs are shrinking by alarming amounts. In today's unstable economic conditions, many American's are being forced to turn to credit cards as a way to extend their income. As a result, consumer debt is at an all-time high. Bankruptcy has become exorbitantly expensive and difficult to do as a result of the bankruptcy reform laws passed in 2005. People are turning to various alternatives.

Debt settlement is one of the most popular methods for debt reduction because once you pay the creditor off, it's done and you no longer have to worry about the debt. A non-profit debt management company will typically offer Consumer Credit Counseling Services (CCCS) and have you follow a debt management plan (DMP). But, they have a high failure rate because they don't actually reduce the principal balance of your debt, and the monthly payments are generally higher than the minimum payments you're probably making now. With credit being frozen to the point where only consumers with stellar credit histories can get loans, a debt consolidation loan is pretty much out of the question. Debt settlement is simply the best way to get yourself out of debt and get on your feet financially.

Can't you negotiate the debts yourself?

When negotiating with creditors, you generally have to make the full payment in a single, lump-sum payment. If the debt is extraordinarily large, some creditors may allow you to pay it off in 3 to 4 monthly installments. But, you typically need to have a good chunk of change readily at your disposal to be able to negotiate with creditors on your own. Not everyone does, so they turn to debt settlement companies, because they are able to make regular monthly deposits into an escrow account. Then, when the account has enough money in it for the debt settlement company to negotiate with a creditor, they do, and they pay the creditor from the escrow account.

Debt settlement companies have gotten a lot of bad press lately, so you need to be careful about choosing a debt settlement company that won't take you to the cleaners and make you up worse off than you already are. Choosing a debt settlement company is crucial to maximize debt negotiations and monthly savings. Whether you choose a debt relief company or debt negotiation lawyers, you must make sure the company has a track record setting debt in a timely manner. Also, ask yourself these questions before settling on a choice:

• Is the debt settlement company you are considering accredited by The Association of Settlement Companies (TASC)? TASC accreditation reduces risk to consumers and gives overall confidence because a disinterested third party has independently evaluated the member company for its competence and performance capabilities.
• How much does the service cost? Make sure the program is something that's affordable and realistic within your monthly budget. If you can't afford the program, then look elsewhere, or you're setting yourself up for failure.
• Does the company offer any type of service guarantee? If so, find out what their guarantee is. For example, if a company can't get settlement on your debt, you should not have to pay a fee, or any fee you do pay should be fully refunded.
• Does the debt settlement company you are considering have International Association of Professional Debt Arbitrators (IAPDA) certified debt arbitrators? IAPDPA certified arbitrators understand the laws governing the Debt Settlement industry, so they know what's feasible and what isn't.

Steer clear of any debt settlement company that promises a quick fix or tells you that debt settlement doesn't have a negative effect on your credit. Debt settlement will have an adverse affect on your credit, but it will get better with time, particularly if you re-establish good credit, keep the account balances low and continue paying each month on time.

Once you're out of debt, you may want to get an education on how you can change your spending habits through a Consumer Credit Counseling Service. In addition to credit card consolidation and bill consolidation services, they also provide consumers with ways they can make the necessary lifestyle changes to keep their debt under control and rebuild their credit without once again becoming overwhelmed in debt.