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Watch this clip above to find out whether debt settlement companies are able to hold their promises of settling their clients’ credit card debt with the creditors at the lowest possible amount.

Here’s how debt settlement companies prey on desperate credit card creditors:

Debt relief companies often tell their clients to stop paying their bills. Instead, the customer is instructed to pay a certain amount each month into a separate bank account set up by the company. They promise that once there’s enough money in the account, they will negotiate “lump sum” settlements with creditors. During this time, of course, the interest charges and penalty fees keep piling up on those unpaid accounts.

Source: via MSNBC.com

“The debt settlement field is filled with scam artists who charge huge upfront fees and then fail to settle any debts.” – Liz Pulliam Weston, the author of “Your Credit Score: Your Money and What’s at Stake“

If you’ve encountered such companies that offering such debt settlement solutions – avoid it because it’s a scam!

According to Los Angeles Times, Weston says “The debt settlement field is filled with scam artists who charge huge upfront fees and then fail to settle any debts.” In fact, many debt settlement companies are getting bad press in the media after many of their clients filed complaints against them. It is because many ended up paying off more credit card debt than usual – refer to debt settlement scams.

Here’s some Weston’s advice when are struggling to pay off your huge credit card debt load:

1. Make an appointment with a legitimate credit counselor

Firstly, you have to allow a legitimate credit counselor to review your current financial situation to find out whether you’re eligible for a debt management plan – a five-year-plus low-interest rate plan that enables you to pay off your credit card debt on a regular basis. Weston suggested that you should find a counselor who is affiliated with the National Foundation for Credit Counseling – start finding a credit counseling now here.

2. Make an appointment with a bankruptcy attorney – when bankruptcy is your last resort

When there’s no other way to solve your credit card debt problems, you have to consult a bankrupt attorney to see whether filing for bankruptcy is the best option to eliminate your debt or a ideal way to avoid being sued by the creditors.

3. Start seeking reputable settlement companies when credit counseling and bankruptcy are not your best options

If both credit counseling and bankruptcy don’t really suit you – you can refer to a bankruptcy attorney for some recommendations of legitimate debt settlement companies that may be able to help you paying off debt effectively.

In order to prevent yourself from being trapped, you are advised to learn some smart tips so that you can say No to these irresponsible companies.

Let me share with you some common characteristics of unethical companies:

1. The debt relief programs they offer are normally costly

In general, those companies charge their clients at a very high rate. They include all sorts of service fees which are unreasonable. Besides, they also charge their clients for financial advice and consultation. For people who first approach the settlement companies, you are reminded to make thorough comparisons among different companies to find out the market price.

2. The duration of the settlement plans is usually long

You might be very happy when the debt relief companies inform you that you only need to make a very low monthly repayment when you sign up for their plans. In fact, you should be worried for this offer. You are not enjoying an easy payment plan. However, it makes your settlement process longer and harder. Think about it logically.

Do you think your creditors would agree to wait for 4-5 years to get back partial of your debts? They would have sued you for legal proceeding if you haven’t settled your debt for a long period. You are reminded to take up a settlement plan which lasts for 2 years only.

3. The financial consultants always push their clients for instant enrollment

There are some financial consultants who are good at convincing their clients to sign up their debt relief plans immediately. Beware of these “sales personnel”! You need to consider carefully before making your final decision. You are reminded to evaluate the plan to find out whether it really suits your financial requirements.

Besides, you must not choose any plan which requires you to pay a certain amount of deposit. Stick to this principle: The debt settlement companies haven’t started any debt negotiation process, why do you need to pay them first?

4. There is no alternative provided to the clients

A good debt relief company normally provides its clients with a few alternatives if debt settlement plan is not suitable for them. Those unethical companies usually don’t assess their clients’ financial situation honestly and they never offer other solutions to their clients. Don’t trust these companies. There are many other financial solutions out there waiting for you.

Getting a genuine financial hardship program is indeed a challenging process. You definitely need to put in hard effort to select the right provider to assist you. Learning the tips above will enable you to be a smart consumer.

Start considering to learn do-it-yourself credit card debt settlement – here.

Based on CBS news:

But Illinois Attorney General Lisa Madigan tells CBS News the debt settlement industry, as a whole, is targeting vulnerable consumers. “You would be more likely to settle your debt by buying a lottery ticket than by signing up with a debt settlement company,” Madigan says.

Watch the clip below about a couple who had been given “empty promises” by a well-known debt relief company.

Watch CBS News Videos Online

Personally, I would advice debtors to seek credit card debt settlement on their own and don’t be tempted with the attractive offers provided by the debt settlement companies. If you insist to have someone else to negotiate credit card debt settlement with the creditors on behalf of you – read this.

If you want to learn how to start credit card debt settlement with the creditors on your own – click here.