That’s wrong on his part for asking for it. Two wrongs don’t make a right!! Don’t do it!! Trust me!!

Stay away from any “debt consolidation” company that promises to cut your debt in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.

None of these “debt consolidation” firms have the power to force your creditors to accept settlements. Your creditors have the right to refuse these terms and take you to court.

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Another option is to enter into a Debt Management Plan. Contact your local Red Cross for a referral to the local Consumer Credit Counseling Services (CCCS). In general, CCCS can negotiate your interest rate down to just under 10% and your monthly payment to around 2% of your total outstanding balance. They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to “enrolled in debt management.” This does not damage your credit, but it may make it difficult to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would might be denied while you’re enrolled in the CCCS debt management program…

While an accredited credit counseling program like CCCS can be good you need to be aware that these programs are funded by the credit card industry and this can create an obvious conflict of interest in the advise they give you. Such organizations will often tell people to not file for bankruptcy when they really should. As a general guide, if the reduced payment terms negotiated by a credit counseling firm will simply not work for you, then you should consider filing for Chapter 7. Also, if you are more then 3 months behind on your cards, you should attempt to negotiate direct settlements with your creditors like 50%. If you have completely defaulted on your cards, then you absolutely should try to make direct settlements rather than using any credit counseling program. Be sure to get all terms in writing…never accept verbal promises about settlements over the phone that are not backed up in writing…never give creditors/debt collectors direct access to your checking account.