So, I was just reading on another blog that it's recommended to pay off your debts. That's all well and good if you are in a position to pay off your debt, I agree, do it. But what if you're not? Then what do you do? You could choose bankruptcy, or you could try those debt settlement companies. But bankruptcy won't eliminate all unsecured debt any more and debt settlement companies are coming under governmental scrutiny of late. Besides, a creditor does not HAVE to deal with a debt settlement company if they don't want to.
However, there is a better alternative; if you have credit card debt you can get it drasticly reduced by getting professional help.
Try seeking out an ATTORNEY to represent you. Some can save you 50% of the principle this way (even AFTER their fees). And considering interest, you'll save even more.
Here's an example: Let's say you have $20,000 in credit card debt. You find a law firm that will help you set up an account to make monthly payments toward your debt for, let's say two years. You pay in to the account and also pay the attorney, and after two years you have paid something like $11,000 total. Because you have an attorney, you are getting no hassle calls from creditors, and interest has stopped accrueing on debts turned over to them. Had you been paying, say 20% interest, over 2 years, that debt would have gone to $28,000 or so. And you get out of it for only $11,000! Pretty good, huh. And it's way better than bankruptcy, where credit card debt is NOT eliminated and your credit is affected for 7 years.
This is the best alternative I found. You set your own payment schedule and get out of debt in just a few years. Then you can start rebuilding your credit and in the time it took to eliminate the debt, you can be credit worthy again.