For consumers who are seeking to rid themselves of credit cards and other unsecured debts, personal debt reduction services may appear to be the most expedient solution. However, the debt settlement industry remains mired in controversy, and many states are stepping up their scrutiny and regulatory oversight of the industry. When you contract with a debt settlement company, you are engaging their services to negotiate with creditors on your behalf. The reasoning behind this approach is that the third-party firms can leverage the special relationships they have established with credit card companies to induce creditors to accept reduced settlements in lieu of full payments. Conversely, it is assumed that credit card companies and other unsecured lenders will make a business decision to forego further collections activity in favor of accepting a partial payment in a lump sum. However, although this business model seems reasonable, there are also a number of other factors to consider. Most significantly, many debt settlement companies charge substantial fees in exchange for their services. Furthermore, the debt settlement process can often have a lasting negative impact on a consumer's credit score. Be sure to consider all of your options before signing a contract with a debt settlement company.