There may be other options for relief, including debt management or consolidation.

You might have seen ads promising that you can settle your debt for much less than you owe. If you have a lot of debt with accompanying and persistent collection calls, you might wonder if these companies can provide the debt relief options they promise.

To an extent, they can. Debt settlement companies can be a solution to freeing yourself from debt. But finding a reliable, trustworthy agency goes beyond calling the 800 number in the ads or even doing a quick internet search. Before you choose a debt relief company, you should determine if it's the right solution for your situation, then research legitimate companies with agreeable terms.

What is debt settlement?

Debt settlement is the act of negotiating with creditors and lenders to accept a lump sum payment lower than what is owed and forgive the rest.

Debt settlement companies differ in their terms, plans, requirements and even their legitimacy. Consider these factors when choosing a company to work with.

Debt-settlement companies earn revenue by charging fees equal to a percentage of the initial or settled debt -- typically between 15 and 25 percent. Possible additional costs might include account setup fees and monthly service expenses. These costs could pose an additional burden if you're already struggling financially.

A legitimate debt relief company can't legally ask for upfront payment, so any such request is a red flag. Ask for a breakdown of anticipated costs and fees before signing the dotted line.

You might not owe enough to work with some debt relief companies. These firms obtain the majority of their revenues on a percentage of existing or settled debt, so you'll need to have a minimum amount to make it worth their while.

The generally quoted debt requirement is at least $10,000, though some debt-relief companies can go as low as $7,500.

Debt relief scams are prevalent in the finance industry, so it's important to be on guard. Sure signs of a scam are a company that:

Another way to determine if a debt relief company is legit is to check how long it has been in business. If that company has been in business for several years, chances are it isn't a "fly-by-night" firm with dishonest aims.