Whether or not you have accounts in collections or not, you probably have seen advertisements and commercials advocating why you should use a settlement company to help you in settling your accounts. Many of these companies will also give you the impression that because they have specials relationships with creditors they can obtain settlements for people well below what you could obtain for yourself.

There are a lot of things to take into consideration about using a debt-settlement company. Debt settlement companies charge 5 to 25% on top of the settlement amount to pay off a debt. Let me give you an example. Let’s say you have a $5,000 account that ABC Settlement Company can get settled for $2,500. If they charge you 15%, you would have to pay an additional $325 to settle the account. Your $325 would have to be paid first before the settlement was completed.

Many settlement companies give you the impression that all creditors will eventually settle accounts that are in your best interests. They try to get you to believe that if you try to do this on your own, you will have to settle for more or you will just get turned down. Many of them will not tell you that settlement amounts vary depending upon many factors. Some of these are:

1. Each creditor has different settlement amounts.
2. Your income can determine settlement amounts.
3. Settlement amounts can vary from month to month.
4. The economy is a factor in what creditors will settle for.

In my e-books Stop The Insanity a Guide to stop Bill Collectors from Driving You Crazy and Start Fixing Your Credit Now!, I explain in detail how you can negotiate settlements on your own. Your comments are greatly appreciated.