Debt Settlement Firms - The Disadvantages Many debt negotiation or debt settlement firms try to portray themselves as being a reasonable alternative to a reputable nonprofit consumer credit counseling agency. While both types of organizations have the potential to help people in need, there are several disadvantages to using debt settlement firms. These agencies' main goal is to make money at the consumer's expense. Debt settlement firms offer negotiation and settlement of unsecured debt with your creditors rather than providing consumers with budgetary guidance or a debt management plan. Ideally, one of those two options would be preferable if you are not able to settle your debts by dealing directly with your creditors on your own. That is why you should consult a consumer credit counseling agency - because a workable budget or debt management plan will solve all of your debt and credit problems more easily and quickly. A debt management plan is customized to match your specific repayment capabilities after you have had the time to meet with a certified credit counselor, and allows you to lump all of your debts together into one reasonable monthly payment. Once the program is completed, all of your creditors will add notes that they have been paid in full on your official credit record. These positive "marks" on your credit record are what helps your financial future. A debt settlement firm does not provide consumers with those "good marks" because the creditors have the final say as to which debts get fully officially reprieved, and they have no incentive to do so in a settlement situation. It is preferable to work with an accredited nonprofit organization that has at least one certified credit counselor, offers multiple services, and provides extras for their clients. There are numerous such organizations out there, and most have local offices and websites where people can acquire useful information from as needed for research. However, after factoring in other criteria, the choice to where you need to turn becomes even more obvious. Look for complaints filed against any company you're considering at all levels (local and federal). Ask for and verify all references, and research them thoroughly using the Internet and any other means you prefer before considering entering into any type of financial arrangement. One of the main complaints about debt settlement firms is that they charge their clients high fees up front before providing them with any services whatsoever. This should be a major red flag. Ask a lot of questions before entering into any agreement, and leave their office immediately if you are not thoroughly satisfied with every answer. Take the time to thoroughly evaluate all of your options before entering into any financial agreement, and choose your service provider wisely to achieve the best results. It would be a shame to wreck your credit report unnecessarily by working with a company that promises great things, then leaves your credit worthiness in worse shape than before. Pamella Neely writes about debt settlement firms and debt consolidation for http://www.debtconsolidationabcs.com, where you can find other articles about the pros and cons of consolidating your debt.