Before you proceed with a debt reduction program, it is important to determine whether debt settlement is legal in your state. Although there is a great deal of variation in the laws governing debt settlement, legal standards applying to the practice are similar in most states. While it is perfectly legal for creditors to negotiate settlements with their customers, they are under no obligation to do so. Furthermore, a growing number of credit card companies have now issued policies disallowing settlement offers from third-party companies. Because many debt settlement companies are not affiliated with law firms and therefore cannot offer legal advice or representation to their clients, they are often reluctant to continue to work with clients who are being sued by their creditors. In fact, it has often been noted that debt settlement companies often drop clients who are facing legal challenges over their unpaid debts. For all of these reasons, there are many legal unknowns in the realm of debt settlement, and experts advise consumers to work only with reputable firms when pursuing debt reduction.