Are debt settlement companies safe, or should I negotiate myself?

For-profit debt settlement companies carry real risks. Many tell you to stop paying creditors and instead deposit money into an account they control, which triggers late fees, penalty interest, credit damage, and possible lawsuits while you wait, and they charge fees, often 15 to 25 percent of the enrolled debt, only allowed after a debt is settled. The Federal Trade Commission bans upfront fees for these services and has taken action against deceptive firms. You can often negotiate directly with creditors yourself for free, or work with a nonprofit credit counseling agency on a debt management plan. If you do use a settlement firm, verify its track record and understand the tax and credit consequences first.