This article is a must for anyone considering debt settlement but doesn't really understand it. It explains exactly how it works and why it's probably not for you. It will hopefully clear up all misunderstandings, and answer all existing questions.In general terms, debt settlement refers to a process by which you or a representative negotiates with a creditor to get any, or all of;a) a reduced interest rate b) a lower balance or forgiveness of debt c) a reduced monthly paymentThe above states what debt settlement sets out to achieve and the following describes the ins and outs of the process.1) You will need cash to make debt settlement work, and if you don't have any then forget about debt settlement.2) There are no payment plans available, and you will need to forward a lump sum to the creditor or his representative.3) Settlements of debts will most often range between 25% to 70% on the dollar depending on the creditor.But some credit card companies may make you a take it or leave it offer of 10 percent, and some creditors may refuse to play ball at all.5) The best time to start the debt negotiation process is when you are three to four months delinquent because many lenders won't even discuss the issue if you're current. You should therefore expect to receive at least two months of letter and phone harassment before you instigate the procedure.6) Credit card companies and collection agencies make it difficult and frustrating to talk to somebody in authority, so expect to be kept on terminal hold for hours upon hours.7) Creditors have little or no interest in how much you owe other lenders, and are only interested in getting the highest settlement amount that's possible. This makes the handling of multiple accounts, which you almost certainly have, very difficult and very frustrating since you'll more than likely have to go back to lenders several times in order to work out deals that will satisfy all of them.8) Expect to be put under a ton of pressure to act fast, and to be asked countless times to wire or mail money the same day. The thinking behind this is that it will increase your stress and result in the recovery of money.9) In spite of the pressure that you'll be put under, you will have to insist on getting any and every deal in writing before you make any payments because if you don't, you'll more than likely get demands for more money.10) Your credit score will be very adversely affected.Having read all of the above you're quite likely to ready to call a debt settlement company that will handle all the work, and soak up all the abuse for you, and although that are excellent agencies out there, you must be very careful.The present economic crisis has spawned a whole host of new companies that often know less far less than is written here about debt settlement, and there are many others that are out and out rip-offs.Never pay any debt settlement company a deposit or an upfront fee, and always check them out with the BBB (Better Business Bureau) before signing anything.My personal opinion is that the vast majority of lenders have little or no interest in debt settlement, and would much prefer to simply extend a little more credit in order to ensure that the borrower keeps making endless minimum payments, and incurs ongoing finance charges.Scores of excellent credit counseling agencies exist however, and many of the best ones will even handle debt settlement. They're inexpensive, and if you have debt problems and haven't tried one, then please do so right away.