Don't Settle Yourself Short

"Settle your debt for pennies! We'll make your debt disappear!" The struggling economy over the past few years has left many floundering in credit card debt. And from it all, companies have sprung up claiming to be able to get you out of debt—seemingly in the blink of an eye. But don't let yourself be fooled. Settling can end up costing you in the long run. Before you jump at the chance to lessen your debt, make sure you know the facts.

There is NO guarantee. Settlement companies cannot always convince the credit card companies to settle.

Don't hand over money upfront. Beginning October 27, 2010, debt settlement companies cannot charge or collect a fee from you until your debt is settled or reduced.

Make sure you do your research. You don't want to do business with a company that's best known for its customer complaints. You are giving them money that could ultimately go toward your debt, so you should be satisfied with the services. Before you agree to anything, make sure you know:

• Fees and Terms
• How long before a settlement offer is made to each creditor
• How much you need to save before they will make a settlement offer to each creditor
• Possible consequences, should the settlement company ask you to stop making payments to your creditors

Consider your options. Debt settlement companies are not your only way out. Talk to your credit card company, or contact a credit counselor; there are free services out there that can help.

For more information from the Federal Trade Commission on debt settlement companies, click here. And for more debt resources and tools, click here.

Visit www.feedthepig.org for more money-saving tips.