Millions of Americans are facing growing debt problems and, for many, entering into a debt settlement program is an effective means of becoming financially independent. All debt settlement companies are not created equal, however, and making a wise decision on which company to do business with will determine if you become debt free or remain debt ridden.

The major difference between debt settlement companies comes down to the client payment, account settlement, and company fee model the company uses. Some companies employ such lopsided arrangements that the Federal Trade Commission has named debt settlement as one of 5 industries it will study in-depth in 2010. What does this mean for the average person looking for a solution to debt problems? It means do your research and choose wisely when looking for help.

The vast majority of debt settlement companies take a considerable percentage of the total debt owed up-front. These types of companies also charge their total fee in the first 6 – 8 months of the program. Therefore once the company has collected their fee they have little or no incentive to see the client through to complete debt resolution and settlement of all accounts. As a result, most clients drop out of these programs in disgust with few or no actual settlements having taken place, but not before the company has milked them of hefty program fees.

There are a few debt settlement companies, on the other hand, that prefer to operate with a more fair and responsible payment and fee arrangement. These companies charge a reasonable up-front enrollment fee, and charge clients a percentage of the money they were able to save the client through successful negotiation and account settlement with creditors. Therefore it is in the interest of the company to get the best possible settlement arrangement for their clients, as their fee is derived from the total savings amount rather than the total debt owed.

Most reputable debt settlement companies are also accredited members of The Association of Settlement Companies (TASC), a trade organization working towards reform and standards for the entire industry. TASC accredited companies have been independently evaluated by a third party to conduct fair and responsible practices in debt settlement.

Deciding on which debt settlement company to enter into a relationship with should not be made lightly. But by doing your research and understanding the business model these companies utilize, you can find a responsible and ethical professional to help you reach your debt resolution goals.

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