Debt negotiation services, more commonly called debt settlement services, are big in the debt relief market right now. The television, radio and internet are full of ads for these companies. They do paint a very appealing picture of the services that they offer, but beware of things that sound too good to be true. I am not saying that they are not able to do for you what they are saying, but at what price?

Debt negotiation companies will tell you that it is your right to pay less than what you owe on your credit cards. And you can pay less than what you owe and walk way and move on with your life, but if you think there will not be consequences for choosing this option, you are wrong. If you think you can go from being current on your accounts today and settling them tomorrow, that is not going to happen either.

Debt settlement is an option of last resort. This is something a lender will consider, if they think that it is the only way they are going to see any money at all. So, debt negotiation is not really an option unless your debt is 3 to 6 months past due. There are two things that are true about this debt relief method whether you negotiate with the lender or you have a service do the negotiating for you. This option will ruin your credit and anytime you do not pay your balances in full it is not reflected positively on your credit report.

One of the biggest problems with debt settlement services is the fees. Many of them take fees up front and on top of that most of them charge their customers based on the amount of money they are able to save their client on each debt. So, if you are using a service that charges 15% of whatever they save you and you have $10,000 debt that has a forgiven amount of 60% or $6,000, you will be paying a fee of $900. Then there is the income tax you will be required to pay on the $6,000 that was written off.

Truthfully, you can negotiate a settlement on your debts without a company just by calling the lender. It may take several calls and several months, but normally when enough time passes, the lender will make a settlement arrangement with you. Remember, this is an alternative of last resort and should not be used because you think it is going to be quick and easy. If you decide that this method is for you, take the time to do the negotiating on your own and do not use a service. Your money is better spent going toward your debt than to a company that is doing something you can do for yourself.