Amendments to the FTC's Telemarketing Sales Rule prohibit companies that sell debt settlement and other debt relief services on the phone from charging a fee before they settle or reduce your debt.

If you do business with a debt settlement company, you may be required to put money in a dedicated bank account, which will be administered by an independent third party. The account administrator may charge you a reasonable fee, and is responsible for transferring funds from your account to pay your creditors and the debt settlement company when settlements occur. See Settling Your Credit Card Debts at ftc.gov/credit for more information.

Before you sign up for the service, the debt settlement company must give you information about the program's: 

• Price and terms. The company must explain its fees and must tell you about any conditions on its services.
  
• Results. The company must tell you how long it will take to get results. That is, how many months or years before the company will make an offer to each creditor. 
  
• Offers. The company must tell you how much money or what percentage of each outstanding debt you must save before it will make an offer to each creditor. 
  
• Non-payment. If the company asks you to stop making payments to your creditors – or if the program relies on your not making payments – the company must tell you about the possible negative consequences of doing so.

If you decide to pay a company to negotiate your debt, do some research. Consider other people's experiences. One way to do that is to enter the company name with the word "complaints" into a search engine. Read what others have said. You are making a big decision that involves spending a lot of your money that could go toward paying down your debt. 

Be wary of any debt relief organization that: 

• charges any fees before it settles your debts
  
• pressures you to make "voluntary contributions," another name for fees
  
• touts a "new government program" to bail out personal credit card debt 
  
• guarantees it can make your unsecured debt go away 
  
• tells you to stop communicating with your creditors 
  
• tells you it can stop all debt collection calls and lawsuits 
  
• guarantees that your unsecured debts can be paid off for just pennies on the dollar
  
• won't send you free information about the services it provides without requiring you to provide personal financial information, such as credit card account numbers, and balances
  
• tries to enroll you in a debt relief program without spending time reviewing your financial situation.
  
• offers to enroll you in a DMP without teaching you budgeting and money management skills.
  
• demands that you make payments into a DMP before your creditors have accepted you into the program.