According to an investigation by CBS, American debt grows by $75 million every hour. In total, Americans owe about $850 billion in credit card debt — and credit card debt is only one of many kinds, accounting for just 5.5% of average household debt in the U.S. If you’re one of these Americans drowning in debt, the good news is that you’re not alone in the situation; there are many programs and companies that specialize in helping you get out and stay out of debt.

There’s also a lot of debt settlement advice floating around the Internet, but not all of it comes from reliable debt management companies. In fact, many indebted people even fall prey to scams, since debt places people in a vulnerable place both financially and emotionally. So here’s some debt settlement advice you can trust: Learn the difference between debt settlement and debt management services before you make any decisions.

Debt Settlement
Debt settlement involves an agreement between you and a creditor that you’ll pay them less than you owe. Sounds ideal, doesn’t it? Well, there are significant downsides to this move that you should be aware of.

First of all, debt settlement has an extremely negative effect on your credit score. You’ll find it more difficult to borrow at affordable rates in the future; since prospective creditors will be able to see that you borrowed money that you couldn’t pay back, they’ll either refuse to lend you money altogether or charge a higher interest rate to cover their increased risk.

Secondly, the amount of forgiven debt may be taxable, which will offset your savings. All in all, debt settlement is far preferable to defaulting, but still has serious consequences. If you do end up settling, make sure that the settlement is correctly reported so that your credit report doesn’t show that account as delinquent.

Debt Management
The preferred option to debt settlement is debt management. The most important thing is to seek debt management help early, as soon as you realize that you’re in over your head and your income isn’t sufficient to pay your debts. A big warning sign you should look out for is when you’re borrowing from one creditor to pay off others.

Debt management comes in several forms. Credit counseling is an early step you can take. This involves a financial professional who has experience in consumer debt management who can help you make a budget to live within your means and pay off your debt in a timely manner.

Debt management plans can also be arranged, in which a company negotiates with your creditors so you can pay them off more slowly. Often, these plans include debt consolidation assistance, in which you roll all your debt into one and pay off the consolidation company over time.

Have you gotten debt management counseling or assistance? Do you have debt settlement advice to share? Discuss your experience in the comments.