Debt settlements are a way for consumers or small businesses to eliminate their unsecured debt while avoiding bankruptcy. Before talking with a debt settlement company it would be prudent to educate yourself on how the industry works. Being more knowledgeable about the debt settlement industry prior to talking with a company will help you identify the most legitimate companies and also avoid possible scams. This article will educate consumers on some basic principles that should be clearly understood before talking with a particular debt settlement company.

Make sure that the debt settlement company has a performance based fee system. This means that they should only get paid a percentage of the amount of debt that they are able to eliminate. Never pay an upfront fee and if a company asks for an upfront fee it is a good sign that it could be a scam.

You need to be at least $10,000 in unsecured debt to be eligible to utilize the services of a debt settlement company. Unsecured debt is just debt without a tangible asset backing it up. Credit cards are the most common form of unsecured debt.

A legitimate and established debt company should be able to eliminate at least 50% of your debt and cases in the 70-80% range are not at all uncommon. The only real consequence of debt settlements is that it will result in a slightly lower credit score at least initially. Most consumers are more than willing to accept a lower credit score in order to be able to eliminate over 50% of their debt.

The debts settlement industry has never been so favorable for consumers to try and get out of unsecured debt. Creditors are very concerned about the increasing rate of delinquent accounts and are agreeing to deals that were unheard of just a year ago. If you are over $10,000 it unsecured debt it would be financially prudent to get a debt settlement while the conditions are so favorable.