It is true that debt settlement companies advise borrowers to make repayments to the company instead of the lender.
Settlement companies give this advice because regular repayment is going to make it difficult to convince the lender that a debt waiver is necessary.
However, this does not mean you should get in touch with settlement companies and seek relief even when in position to make repayments on time.
If you are struggling to repay the debts, the payment will be done in a relaxed manner.
Further, the amount will not be aimed at full debt repayment.
Rather, the settlement company will wait until 30-40% of the amount owed has been deposited.
This will be used as the base for all negotiations.
Debt settlement companies will continue negotiations and will point out that the borrower is depositing money on a regular basis and will continue to do so provided the company offers a 50-70% waiver.
The settlement company will state that such a waiver will result in immediate transfer of the funds to the lender.
Needless to say the prospect of receiving 30% repayment in lump sump as compared to waiting for uncertain monthly repayment will seem very attractive to lenders.
This is the basis on which debt settlement works.
However, if the lenders discover that the individual has the capacity to repay the entire debt in full without any problems, even the best negotiator cannot get a settlement.
Settlement is a closed club - it is open only to those who are at the brink of bankruptcy.
You do not want to portray yourself as such a person.
If word gets out that you may opt for bankruptcy, your credibility in the market will dip and you will find it very difficult to establish yourself in the market again.
Check out various other debt relief options but leave settlement only when you have no option left except for bankruptcy.
This may sound unfair but you do not want to touch something like settlement unless you are desperately in need of the same.
A careless and casual approach is only going to make things worse.