Is Debt Settlement Ethical?

Due to the vagueness and complexity of the debt settlement industry, many individuals wonder if debt settlement is even legal, much less right and good and ethical.  After all, a debt relief company takes on your creditors and tries to negotiate with them to simply write off your debts.  Is this legal?  Is this fair and right?  How can debt relief companies do this without the law cracking down on them?

Actually, depending on what state you live in, debt settlement is completely legal, and creditors actually prefer to negotiate debt settlement deals with debtors rather than go through the traditional legal process of bankruptcy.  In a bankruptcy, a creditor will likely in up with nothing.  In a debt settlement deal, the creditor will still get a payment, though that payment will be significantly reduced.  The arrangement that a debt relief company comes to with a creditor is fully legal, documented, and contractual.  Again, however, this depends on what state you live in, as certain states have harsher restriction on debt relief practices than others.  Do some research locally to find out what's acceptable in your area.

The point at which illegality becomes an issue is during the part of the process when you're selecting a debt settlement company to work with.  There are a lot of scams out there.  There are even more companies that want to make a quick buck and won't really fight for you.  If a company promises you the world and charges you exorbitant fees right off the bat, they probably aren't' legitimate.  Do some research.

If you locate a solid, reputable company to work with, however, you've completed the only part of the process during which there is any danger of encountering any illegal or unethical practices.  Debt settlement itself is fully legal and even recommended by companies on both sides of the negotiation table.