So you got a couple of credit cards, used them a bit too much and now you need to settle your credit card debt. This is the situation that many people find themselves in. You do have options so don't let anybody tell you different. One of those options is debt negotiation, also known as debt settlement.

Of all the options open to those suffering from credit card debt, debt settlement is one of the best. Critics of debt settlement don't tell you the entire story, though. When considering a debt settlement solution, there are three areas to focus the attention on.

First is what debt settlement company to use.

This is the most important decision you will make because debt settlement companies are everywhere. There are many to choose from but not all of them have YOUR best interest at heart. The reality is that some only care about taking your money. Settling your debt takes a back seat.

A reputable company will tell you up front what the possibilities are and will represent your interests with integrity. Before any papers are signed, the costs and associated risks should be laid out. Do a little research and find companies with good consumer reports. The Better Business Bureau is a good place to look for unresolved complaints. A lot of unresolved complaints or reports are a big red flag.

Second, consider your possible tax liability.

This is a common scare tactic used to turn potential clients away. While there is a possibility of a tax liability resulting from credit card debt settlement, it isn't likely. Creditors must report all canceled debt over $600 to the Internal Revenue Service on a 1099 form. The IRS views canceled credit card debt as taxable income and you have to claim it on your next tax return.

The IRS offers an exception called insolvency. Insolvency is when what you owe exceeds what you own and your tax burden is removed entirely. More than 95% of people using a debt settlement solution are insolvent. After all you're already in trouble financially so insolvency is all but guaranteed and your tax liability is wiped out.

Also consider the impact on your credit report.

This is another scare tactic that so called "experts" will spew. If you have credit card debt and are considering a debt settlement solution, your FICO score or credit rating is the last thing you should think about. Speaking honestly, when you are having trouble with the minimum credit card payments, it can and will affect your physical health, cause you to lose sleep and affect your nerves. Since you are behind in payments and probably delinquent, your credit rating is already affected negatively.

Credit card debt settlement stops the calls, stops your fretting and gives peace of mind. Most times, balances are decreased by as much as 50% of the original amount owed. More importantly, they are being paid down now. When your credit card balances are paid off, the debt settlement company requires the creditor to mark your account as "paid in full" or "satisfied" on all of the credit reports. So the negative credit effect is only temporary.

Within a few months of satisfying the settlement, your credit score will begin to rise again. Credit card debt settlement does not lower your credit score, being delinquent does. Paying those bills off reflects positively on you.