Have you spoken with a debt consolidation company and you were told you don't have to pay back the full amount that you owe creditors? Maybe you owe $25,000 in credit card debt, but they tell you that you'll only have to pay $10,000 to make it all go away. Sounds a bit too good to be true, right? Well, the catch here is that you might end up putting yourself in a poor financial position for the foreseeable future. The biggest red flag is if you are instructed to stop making payments to the credit companies. What this does is add more and more late payments every month. Sure, the creditors may settle for less than you owe, but what's the cost? Some people will find that their credit report has over 50 late payments of 90+ days. This absolutely ruins your credit score and it can take 7 years for the late payments to disappear from your credit report.