Stay away from debt negotiators if you need to repair your credit. They'll do more harm than good to your valuable credit rating.

In many cases, debt negotiators could be more accurately dubbed "credit destroyers." If you dont know what to watch out for when dealing with debt negotiation companies, thats exactly what theyll do.

Debt negotiators often make a very bold claim; that they can get your creditors to agree to accept only a percentage of the amount you owe them. While this may in fact be true, your credit may be destroyed in the process. In a worst case scenario you could also end up owing even more money than the debt negotiator promised you would save.

Avoid debt negotiators who make claims that seem too good to be true. Any debt negotiator who guarantees that your unsecured debt can be removed should be regarded with healthy skepticism. The only thing thats likely to end up being removed is your good credit rating.

You may also have to pay several expensive fees upfront in order to gain some very questionable advice. Unscrupulous debt negotiators may try to convince you to stop paying your credit card bills altogether. If you follow this advice you'll regret it.

For each missed credit card payment, you'll be charged late fees and your credit score will plummet. In the meantime you may be charged hefty monthly fees by your debt negotiator who is claiming to be working to reduce your debt.

In actuality, the negotiator waits for several months and then contacts each of your creditors to tell them that you no longer have the means to pay off your debt. The negotiator will try to convince the creditors that they should forgive some of your debt. If successful, the negotiator may reach a settlement with your creditors to close out your account and require you to pay back somewhere between 10 50 percent of the original balance owed. If a creditor is convinced that you'll default on your debt, they may be willing to forgive some of your debt in as effort to at recoup at least some of their losses.

It might seem like a great idea to enlist the services of a debt negotiator if you owe $9,000 and can get your debt reduced to $5,000, for example. The $4,000 you save will be considered taxable income by the IRS, however. Come tax time you could end up losing your yearly refund and even owe money. The IRS is not as forgiving of debts as some creditors may be.

Although a debt negotiator may convince many creditors to forgive some of your debt, there's no guarantee your creditors will agree to any settlement. In the meantime you could be sued for nonpayment, have your wages garnished and put your assets at risk. Your credit rating will also end up in much worse shape than before you consulted with a debt negotiator.

No quick fix solutions offered by debt negotiators will improve your credit score. Only time and a commitment to pay off your debts will truly help you in the long run. Remember, the choices you make today will have a profound influence on all of your possible financial futures.