Image: Woman with credit cards © Corbis

Computer salesman Dennis F. tried to build a real-estate empire -- and wound up with $270,000 in credit card debt he couldn't pay.

Dennis, who asked that his last name not be used, hadn't counted on the high vacancy rate and tenant-caused damage that plagued his properties: two condos in Chicago and a 22-unit apartment complex in Phoenix. At one point, he said, he was shelling out $20,000 more a month than the properties were taking in.

The Vista, Calif., man tapped his 401k, drained his children's college savings and used 0% credit card offers to keep the properties afloat, eventually carrying balances on 13 cards. But then he was a day late with a payment. His interest rates soared, and collectors began to call.

"They're brutal," Dennis said of the calls, which sometimes came every 15 minutes. "They were like, 'You need to give us $80,000 today.' "

Dennis attempted, and failed, to negotiate settlements with his creditors. Then he turned to Debt Settlement USA a Scottsdale, Ariz., company that assured him it could do what he couldn't.

Liz Weston

Liz Weston

So far, so good, Dennis said. Within three months, the negotiator assigned to Dennis' case settled a $60,000 credit card bill for $18,000. A few months later, another $60,000 debt was settled for $20,000.

After 11 months in the program, Dennis had settled a total $221,000 of his debt for $75,000 -- and paid Debt Settlement USA a fee of nearly $38,000 for its help.

"Their fee is exorbitant," Dennis said. But the settlements were "a heck of a lot better than I could do. . . . I'm thrilled with what they've done."

Plenty of perils

Largely unregulated and filled with perils for consumers, the debt-settlement industry has nonetheless found a niche among troubled borrowers who are trying to avoid bankruptcy.

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Debt settlement is sometimes confused with debt consolidation, in which borrowers are offered one big loan to pay off their smaller debts, and with credit counseling, in which agencies attempt to set up low-interest repayment plans so borrowers can pay off credit card debt over time.

Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.