Debt Settlement is a relatively new service being offered in the United States and it has become increasingly popular due to the current economic crisis. The service itself is different from other services with the same goal and so it is very easy for clients to be confused about such programs. Consumers should be fully aware of what this service is and what it isn't before enrolling.

Debt settlement is a program for those with financial hardship. If one does not struggle to pay their bills they should not typically enroll in such a program. This program is a happy medium between the extremes of (high) normal creditor payments and bankruptcy.

Monthly payments do not go directly to ones creditors. Payments only go towards two places, fees and escrow funds. The escrow funds are used to settle the accounts, typically in a lump sum, with the creditors. As it often takes months or even years for enough funds to accrue in escrow, some creditors do not see any money at all for a long time.

This service does not completely stop creditor calls. Creditors continue to call in attempts to collect funds. Call from collection agencies can often be dramatically reduced bu those from creditors typically cannot. One should enter a settlement program fully aware that creditor call will continue and may even increase in volume. Creditor calls to ones place of work can typically be prevented.

Settlement quotes are an estimate only. There is truly no way to guarantee an exact quote for debt settlement as it varies depending on the creditors, the client's financial situation, and other factors. The quote given at the start of the program may not be the actual outcome. In the former case, extra funds would be returned to the client in the latter, the number of payments would usually increase. The vast majority of settlement clients save a great deal of money vs. paying their creditors in full plus fees. And since there should be a hardship anyhow, this result is always better than the client continuing to simply do as they are presently doing.

This program cannot prevent a creditor lawsuit. No service can! In America anyone can be sued for anything at any time and this includes lawsuits for debts included in a debt settlement program. Debt settlement companies can and do, however, attempt to settle the debt out of court. Some companies also help by suggesting lawyers who can help the client at reduced rates to delay trial and/or settle out of court. In general it is best to keep ones debt program as short as possible to prevent lawsuits from happening and to accrue funds fast enough to settle them if they do happen.

For those who qualify for and understand settlement programs fully many benefits can be achieved through this type of program. As always "be prepared" is the best motto to follow.