That's a question I get asked a lot. After all, there are lots of horror stories about this aggresive debt reduction strategy (that has become VERY popular with so many people in debt these days). It worked well for me, which is why I decided to share my experiences in the first place.

But I wonder - when you read about these unhappy customers, are the companies at fault? Or are their customers, who expect to get out of debt instantly after years of poor financial decisions?

The real problem is that many of these settlement companies don't educate their customers properly. Settling your debt is a lot different from credit counseling, which simply consolidates your debts and lowers your interest rates.

Settlement involves stopping payments to gain leverage, then paying off your debts at a reduced amount. The end result can be very beneficial - you can save up to 60%. But credit card companies want (actually they deserve) their money, that you agreed to pay them. So when you stop paying, they call your bluff - and sometimes keep calling. And in the end, it will hurt your credit. As it should, since you stopped paying.

But if you truly can't pay your bills, this is a legitimate option.

A good debt settlement company will let you know ahead of time exactly what will happen - and they'll help you through the rough times.

So, are there really any ethical debt settlement companies? Of course.

How do you find them?

First, get everything in writing. If you can't get a great offer to save you lots of money in writing, then it really isn't an offer.

Second, check out the company's Better Business Bureau report. This isn't foolproof, since many people with bad experiences don't file a complaint. But if a company has a lot of complaints - especially ones not resovled - then proceed with caution, or you might be the next horror story.

Finally, ask lots of questions, so you are an informed consumer. Treat the hiring of a debt settlement company like you would hiring any professional.

And in the end, you'll be out of debt - and have a lot less stress!

Kris

P.S. Since the company I used a few years ago is long gone, the 2 companies I recommend are Hoffman Brinker and CuraDebt.