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Many consumers in America find themselves buried in increasingly higher debt and at some point looking for debt help. Their monthly unsecured debt payments are growing in both principal and interest, and they are finding it more difficult to make the monthly payments. As a result, these late payments are impacting their credit score and they are ending up with bad credit.

First of all, let's talk about unsecured debt and what qualifies for a debt settlement program. The first and most obvious problem for people is their credit card debt. Additionally, past medical bills, payday loans, other unsecured loan not backed by the government, past due rent, etc. can all add up as debt that you cannot get away from. Secured loans such as a mortgage or auto loan do not qualify, nor does student loans.

So what exactly are your options? The first and best choice would be to control your spending, tighten your belt, and as quickly as possible make pay down your unsecured debt. Although its sounds good, sometimes this is just not achievable for many reasons. Bankruptcy laws have changed and it is much more difficult to declare bankruptcy, and it is a stigma that will stick with you for up to 10 years. For most looking to avoid bankruptcy, debt settlement is often a great alternative.

Debt settlement reduces your monthly payment into one manageable payment. That payment gets set aside until you accumulate a large enough chunk so the attorneys can start to settle your outstanding debt. This is usually a onetime payment; typically most of these companies are willing to settle from anywhere between 20-75% of your outstanding balance. The creditor will then forgive the remainder of your balance and most people can typically eliminate all of their debt within 12 to 36 months.

In the meantime it is a good idea to start saving money towards the debt settlement and stop paying your creditors. After you have settled your debts, take advantage of the free credit report you can access every year. Your settled debts will reflect a zero balance, but your history of delinquencies will remain.

It is important to understand that this process will ruin your credit, but if you have so much debt that you cannot make the payments, the last thing you need is to apply for more credit. Or, an even worse idea would be to use credit to pay off debts, only to make your situation worse. Creditors will still call you and try to bully you into paying. It is important that you notify them that you are in a debt settlement program and redirect their collection efforts to the debt settlement company for quicker resolution of your unsecured outstanding debt.

It is important that you cut back on your spending habits and work your way out of debt. Once the debt has been settled, get into a credit repair program to build your credit back up, a process that will only take you about a year. It is a process, but one that is well worth it.