As the economy has weakened and unemployment has caused debt to become unmanageable for many people — one type of company has flourished — debt-settlement services.

Debt settlement companies, which are different from non-profit credit counselors, are under fire from lawmakers, regulators and consumer advocates who say they are exploiting desperate borrowers.

USAToday took a look at the issue and listed several criticisms of the debt-settlement industry.

1. Upfront fees reduce the amount available to pay off creditors. When you sign up for debt-settlement the company will likely tell you to make monthly payments into a savings account, says USAToday. They will then use this money to settle the debt.

But the amount available to pay creditors is often reduced by the debt-settlement company’s fees. An investigation by the Government Accountability Office of 20 debt-settlement companies found several instances in which up to four months of monthly payments were kept by the debt-settlement company before any money was put aside to settle debts.

2.Debt-settlement companies often tell consumers to stop paying their bills, which leads to late fees, higher interest rates and lawsuits. A trade association for debt settlement companies says that its standards prevent members from telling consumers to stop making payments, but the Government Accountability Office report says that 17 of 20 agencies contacted encouraged their secret shoppers to stop paying their bills.

3. Consumers can negotiate debt settlements on their own. There’s little reason to hire someone to do something you can do yourself. In fact, your lender may actually prefer it.

American Express doesn’t work with for-profit companies that focus exclusively on debt settlement, spokeswoman Marina Hoffmann Norville says. “We believe there is no service or benefit that a for-profit debt-settlement company can offer our card members that they could not receive from working directly with us.”

Drowning in credit card debt? Debt settlement can be tricky [USAToday]

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