CHARLESTON, W. Va. - Four companies that offer debt settlement services have agreed to stop, West Virginia Attorney General Darrell McGraw said Wednesday.

The companies -- Debt Relief of America, Fidelity Debt Consultants, Freedom Group and New Horizons Debt Relief -- will also refund a total of $517,000 in fees and charges to 366 West Virginia consumers.

Debt settlement is a plan offered for a fee in which consumers are advised or expected to stop making payments to credit card banks or other unsecured creditors and are directed to make monthly payments to the debt settlement company or into a separate fund or account until the debt settlement company determines that sufficient funds have been accumulated, McGraw said.

The debt settlement then attempts to negotiate lump sum settlements of the consumers' accounts for less than the balance owed.

McGraw does not like the practice and feels anything related to it should be left up to lawyers.

"Although the debt settlement approach to debt relief may work for some persons, the service has legal consequences and should only be offered by persons licensed to practice law in West Virginia," McGraw said.

"Notwithstanding our concerns about the risky nature of and the fees charged for debt settlement services, I commend these companies for cooperating with our office and for agreeing to discontinue their services here in response to our concerns. My office will continue to scrutinize the debt relief industry in an effort to protect consumers who are already facing dire financial circumstances from paying excessive fees for services that may leave them worse off than before."

The companies typically charge a contingency fee of 20 percent or more of the amount saved for the consumers and an up front fee. McGaw says that while debt settlement services are permitted in some states, West Virginia's Debt Pooling Statute only permits for-profit companies to charge a monthly service fee of 2 percent of the amount paid for debt relief services.

He added that the four companies that settled were not properly licensed as credit service organizations.