Although debt settlement can adversely affect credit for up to seven years, it is nonetheless a viable option for people who have more debt than they could ever repay, and who would still suffer with a bad credit score for seven years.

Admitting you have more debt than you can ever repay may be a blow against your pride, yet suffering with debt could be a far worse strain not only on your budget, but also your feeling of financial security. Another thing about debt settlement, is that is does not require you to first attend credit counseling, as does bankruptcy filing.

Basically, with debt settlement you and your creditors agree to a payoff of your existing debt balance. For example, if you have a $10,000 credit card balance, the issuer may settle for a debt payoff of only $4,000. Many creditors will agree to reducing the debt balance by as much as 60%.

While that seems a great way to relieve yourself of the burden of debt, it can; and mostly will, adversely impact your credit score for seven long years. And, even if you can get approved for credit, it's likely you will have to pay exhorbitant interest rates because you will considered a high risk.

Before engaging in debt settlement, ask yourself these questions:

*Is it likely I will be able to repay my debts?
*Can I get credit now, and at low interest rates?
*It is likely that I will be able to not only repay my debts, but also to make timely payments and improve my credit score within 7 years?

If the answer is 'no' to these questions, debt settlement may be your best option. Face the facts: If you cannot timely repay your debts and improve credit within 7 years, what would you have to lose with debt settlement? If your credit is already damaged anyway and you can't get additional credit, why continue struggling to make ends meet with the burden of existing debt on your shoulders?

Can you perform a 'do it yourself debt settlement'? Yes, but many people are not comfortable with the negotiation process, and some fail to keep accurate records of negotiation agreements. For such people, a debt settlement counselor can be very helpful not only to negotatiate settlements on your behalf, but may also get the biggest settlement possible.

Do It Yourself: Contact your creditors and let them know your situation. If you cannot agree to a repayment plan of your debt while also protecting you against negative credit report entries, then negotiate for a debt settlement. Keep records of all conversations/correspondence, and get written agreements before sending in your settlement payment.

For professional assistance, use the Credit Federal menu at the top of this page, and select the Credit Counseling option. Submit our helpful form, and if you meet the minimum requirements Credit Federal will refer you to a debt negotiation specialist. If not, Credit Federal will refer you to a credit counselor.