You've seen them. Hand scrawled signs claiming to legally eliminate your debt. Its spam for city street corners. The signs are so clumsily made that only the uninformed or the very desperate would consider calling about them, yet what they are advertising is actually a legitimate process. Debt settlement is the last resort before bankruptcy. At first blush it sounds like it couldn't possibly be legal or, if legal, then wrong on a thousand other levels.

Let's look a little closer. Say someone has ran up huge credit card debt in answer to the flood of no interest offers from the credit card companies. Things rock along OK until one day, for some reason, you miss a payment. Suddenly this no interest or low interest skyrockets, in some cases as high as 40%. At one time in this country we had laws protecting consumers from such shenanigans and the laws are most likely still in place. They are either being ignored or the credit card giants have found a slimy hole to crawl through to get around these laws. Now that you've missed a payment, chances are good that you won't even be able to pay the minimum on what you owe. It gets worse. Now that you've missed a payment and have a black mark on what was once a really good credit rating, all other outstanding debts are in jeopardy as well and don't even think of getting credit for a new car or any other purchase of any size. Your choices at this point are credit consolidation, which you've probably already done to get to this point, credit counseling, which will totally destroy any credit rating you still have and leave you with no wiggle room financially, or you can turn to a debt settlement company. These people will gather up a few hundred people just like you until they have a couple of million dollars worth of debt and then they will negotiate with the credit card companies on that lump of debt. They will offer the credit card company a quarter million on that two million to settle immediately. The credit card company will see this as a good deal because all those people who owed the money stopped paying when they signed up with the debt settlement company. If these debtors should bankrupt, the credit company gets nothing, plus they will have spent a ton trying to collect. Oh, that collection company that the credit card company turned you over to? It's owned by none other than your friendly credit card company. The reduction on what you owe will be related to the percentage of the lump sum that was yours. Now you will pay the debt settlement company your part of what's left plus their fee. If you signed with "Slick Willie" and his roadside signs, you can see there is a lot of room for someone to dabble with those fees.

Debt settlement is not only legal, but considering the actions of the credit card companies, I would think there is nothing wrong with it on any personal level. It does seem to me to be a perpetual motion sort of thing in that it forces the credit card companies to keep getting worse. If you can find a reputable company, debt settlement is and will be the way to handle staggering debt.