Due to an increase in consumer debt, the number of debt settlement agencies is on the rise. Debt settlement is a legal way to pay off your creditors at possibly a reduced rate. Many debt settlement firms are legitimate and helpful, but not all are created equal. There are many illegitimate agencies out there looking for a quick dollar at the expense of the debtor. This can become a nightmare when people pay large sums of money to firms that promise to erase their debt, only to find they didn’t take action and are now facing legal action from their creditors.

One way to ensure this nightmare doesn’t happen to you is to research the company and look for time tested practices, such as the use of a trust. Another is to do your homework. The Association of Settlement Companies is a trade group that provides a code of ethics and professional standards. The association with this trade group is no guarantee that you are working with an honest firm. Checking with the Better Business Bureau or online reviews will help you make an informed decision on which debt settlement firm to go with if that is the course you want to take.

Debt settlement can help if you fall on hard times due to job loss, unexpected expenses, illness, divorce or death. If you are having difficulty paying your bills, the creditors may accept a portion of the balance. In some cases, 50% as full payment of the debt, leaving you with a clean slate to start fresh. However, debt settlement isn’t the only option, and may not be the best option.

Debt settlement can take a long time, and several occurrences can knock you off your plan, and you could be worse off financially. If you are behind on several credit cards or you have overwhelming debt, contact a Sacramento bankruptcy attorney to discuss what course of action you could take.