If you are one of the millions of Americans who are staggering under a heavy burden of debt, then you may want to consider debt settlement as a way of resolving your financial problem. In debt settlement, you come to an agreement with your creditors to settle your debt for a lower amount or get a lower interest rate.

If you can no longer pay your debt, or if your payments exceed your monthly income, then it may be time to turn to companies that offer debt settlement services. These companies will negotiate on your behalf with your creditors to reduce your debt, typically to around 35% to 50% of the outstanding balance. The debtor will have to pay the reduced balance in a lump sum, and pays part of the savings on the debt to the settlement company as their fee

There are many unscrupulous companies offering debt settlement services out there so the debtor should exercise caution. Before deciding to deal with a company, check them out with the Better Business Bureau to see if there are complaints against them. Once you’ve contacted a particular company, ask for a detailed menu of their fees as well as an outline of their services and guarantees. The company may also ask you to deposit the money to be used to settle the debt in an escrow account; if they do, check if they charge any additional fees.

Reputable debt settlement services should also provide you with a free consultation that consists of a credit review and a time line for completion of the program.