However, settling your debts may not be as easy as the ads imply.  Debt settlement works for only a limited number of people who qualify, and then only if everything goes right.

Keep in mind that there is a difference between debt settlement companies, who run most of the ads, and non-profit credit counseling firms.  Credit counselors work with creditors to restructure payment plans by reducing interest rates and lengthening repayment schedules.

On the other hand, debt settlement companies seek to persuade creditors to accept a reduced lump sum payment for unsecured debt such as personal loans, credit cards and medical bills.

Most creditors won't consider this kind of settlement unless you are three to six months behind on your payments.  If you are not that bad off yet, these firms may suggest that you stop making payments.  The further behind you are the more motivated your creditors will be to settle, they argue.

Instead of making the monthly payments to your creditors, they will probably ask you to make the payments to them.  The money, minus their fees, will be put in escrow to become a part of the lump sum settlement.

It sounds reasonable but there are some problems with it.  The first one is the ethical implications of the failure to pay legitimate debts as long as you are able to do so.  To withhold payment for the purpose of forcing creditors into a settlement raises some serious moral and ethical flags.

Another problem is that as your debt goes unpaid, late fees and interest accumulates and your credit score takes a beating.  At the same time your creditors can become very unhappy. And unhappy creditors can make your life miserable.  They may even take legal action against you.  If that happens, the debt settlement company will abandon you because it can't represent you in court.  So, if things go wrong, you could end up deeper in debt than you already are.

For people in such financial straits the problem is where to get the lump sum for the settlement.  It could mean selling a car, cashing out life insurance or a retirement account (which could have tax implications). Payday Loans if used responsibly can provide the resources needed with no hassle.  Online Payday Loans can get the money directly deposited into your checking or savings account while also providing a secure online application.  It's also easy to do from your home, office, or local library.  Most applications can be done in as little as 10 minutes.

Debt settlement companies have helped some people but many of them appear to be little more than scams.  Attorneys general in several states, including Missouri, have filed suits against several of them, alleging that they have simply pocketed client's money without ever attempting to negotiate with their creditors.