So your new years resolution is to rid yourself of debt and you’re looking to do so as soon as possible. Don’t fret, there are many people in your situation, especially in this current economic climate there are people who are fiscally responsible but just haven’t been able to stand on their own two feet due to the fact that they’ve lost their job, or have had a loved one who needed medical help. The place you may go is the internet to research how to get rid of your debt and before long you’re bombarded with a ton of debt settlement  advertising but before you take the plunge into debt settlement you should read this article and do some in-depth research because debt settlement is only fit for a select few people.

Debt Settlement Red Flags

The debt settlement industry is a bit like the Wild West, little or no regulation and there are quite a bit of bad apples in this bunch. You should look out after the following red flags before you attempt to do business with any of these organizations. Some of these debt settlement organizations will charge you a monthly “service fee”, and enormous up-front, set-up fees to get started and then will turn around and not do a single thing to repair your debt problem.

Other debt settlement organizations promise that they will rid you of your debt or decrease it by over 50% by negotiating with all your creditors and contacting them all to negotiate better terms, but in fact they will never speak with a single credit and just take your money and run. The debt settlement industry is filled with con-artists and scammers, just do a Google search and you will see all of the complaints out there and bad reviews on the web. According to the FTC, last year, there were thousands of complaints filed against debt settlement organizations so “buyer beware” of these scammers.

Other debt settlement organizations will promise to contact all the creditors on your credit report to negotiate better terms, but in fact they will never speak with a single creditor. Just do a quick Google search of all the complaints on RipOffReport.com against debt settlement companies and it becomes very evident that there are a lot of bad apples in this industry. There are thousands of complaints reported according to the FTC (Federal Trade Commission) so it’s in your best interest to do your due diligence and research the debt settlement companies (or avoid them altogether, because there are other alternatives to debt settlement that we will talk about later) before you do anything.

Here are the five red flags of a debt settlement scam:

1. Refuse to give refrences
2. If they give too many promises that sound to good to be true.
3. Bad rating with the BBB or if they’re memebers of the BBB.
4. Do research on the web and find their bad reviews and complaints.
5. If you have a bad feeling about the company or your gut instinct give’s you warnings.

These debt settlement scams run rampant on the web and most of them promise that they will contact your creditors and debt collectors but they won’t.

Is there an alternative?

More often that not-even with a legitimate debt settlement organization-debt settlement is not the best fit for people with a glut of debt. For most people credit counseling with a non-profit credit counselor is probably going to be your best bet in dealing with creditors. The credit counselor will educate you on ways to deal with your debt and they will negotiate better terms with your creditors. Debt consolidation, on the other hand, may take you years to go through and depending on the size of your debt it may best to continue paying your creditors directly rather than pay into your debt settlement for a lump sum payment.

Now a days most states have consumers that are filing for bankruptcy seek out credit counseling 180 days prior the filing of their chapter 13 or 7. Credit counseling may just be the best route to tackle debt and it’s worth calling a non-profit, organization for some free credit counseling to find out if it will help or not.