Debt settlement services are a good alternative to bankruptcy for many people.
They can have a negative effect on your credit for a while sometimes but that soon dissipates.
These companies sometimes only take clients who are in a certain amount of debt.
Before choosing a service do some research to decide which the best one for you is.
Make sure to explore other options also.
A good service should have you debt free in two to five years.
A debt settlement company will look at your debts and then negotiate with your creditors to get the late fees waived, interest rates reduced and other money saving factors like these.
You, of course, will have to make payments to the company.
They in turn pay your creditors.
This can have a small negative effect on your credit report while the accounts are still being paid but one they are your credit report, and credit score will improve again.
Having the paid off credit card accounts on your credit report lowers your debt to income ratio which is what creditors like to look for.
When it comes to closing those credit card accounts that you manage to get paid off during your debt settlement it is really up to you.
If you do so, it may look bad on your credit report because it increases your debt to income ratio.
Creditors do not like to see a high debt to income ratio when you apply for a loan because this increased ratio would make it harder for you to pay.
If you choose to keep the accounts open just make sure you do not run up the bills again.
That is first and foremost, no matter how tempting in might be do not run up the accounts again or you will be back in the same situation or a worse one.
Keeping the accounts open with no (or at least a very low) balance looks better on your credit report than closing them.
It makes you look like you have more credit available (which you do) and it lowers your debt to income ratio, which is a good thing.