Credit Counseling Vs. Debt Settlement - What's The Difference?
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Many people wonder if credit debt settlement is a legal service when they claim they can reduce your credit card debt by 40% to 60%.
This seems too good to be true. But it is - however it does need some clarification. Let me explain the differences then you decide which one is right for you.
Credit Counselors
Credit Counselor services like CareOneSM will help you pay your credit card debt by negotiating with the credit card company for a reduced interest rate. For instance, if your interest rate is 29% a credit counselor service can negotiate that down to under 15% (sometimes a lot more than this) to give you some breathing room.
How can they do this? Because you agree to make fixed, on-time payments until the debt is paid in full. You further agree to not use the cards anymore. Once the account is paid in full the credit card accounts are closed.
Benefits of a Credit Counselor Service
It’s already damaged isn’t it? So I guess the answer is NO because it won’t cause your credit to drop any more than it already is and your credit score will increase over time.
Credit Debt Settlement
A credit debt settlement company is one that negotiates with your creditor for a reduced total amount of money to settle the account. With a debt settlement, your account must be in default before they will negotiate on a reduced balance. Not so with a credit counseling company.
Benefits Of Debt Settlement:
If your job and income is steady but you are just having trouble keeping up, then the credit counselor is best. If you elect to use the credit counselor be sure that you can make the payments as agreed upon. If you miss one payment you run the risk of being kicked off the program.
If you owe more than $10 thousand in debt or have been laid off then credit debt settlement is definitely worth considering.
Be Debt Free in 2010!
This seems too good to be true. But it is - however it does need some clarification. Let me explain the differences then you decide which one is right for you.
Credit Counselors
Credit Counselor services like CareOneSM will help you pay your credit card debt by negotiating with the credit card company for a reduced interest rate. For instance, if your interest rate is 29% a credit counselor service can negotiate that down to under 15% (sometimes a lot more than this) to give you some breathing room.
How can they do this? Because you agree to make fixed, on-time payments until the debt is paid in full. You further agree to not use the cards anymore. Once the account is paid in full the credit card accounts are closed.
Benefits of a Credit Counselor Service
- Getting the interest rate reduced.
- You make one single payment to the credit counselor company and they disperse the money to the creditors.
- On a credit counselors program you will get out of debt much faster than making minimum payments. Usually within three years.
It’s already damaged isn’t it? So I guess the answer is NO because it won’t cause your credit to drop any more than it already is and your credit score will increase over time.
Credit Debt Settlement
A credit debt settlement company is one that negotiates with your creditor for a reduced total amount of money to settle the account. With a debt settlement, your account must be in default before they will negotiate on a reduced balance. Not so with a credit counseling company.
Benefits Of Debt Settlement:
- Using the credit debt settlement method; the amount of money you repay will be far less than you originally owed.
- You will get out of debt quicker since the amount you are paying is smaller.
- The credit debt settlement method is usually complete within two years.
- While you are in the program you can expect a reduction in your credit score. This will only be temporary however.
- There is always the potential to being sued, however this is small. Only a small percentage of people using credit debt settlement ever get sued however it is a possibility and we would be negligent if we did not disclose this.
If your job and income is steady but you are just having trouble keeping up, then the credit counselor is best. If you elect to use the credit counselor be sure that you can make the payments as agreed upon. If you miss one payment you run the risk of being kicked off the program.
If you owe more than $10 thousand in debt or have been laid off then credit debt settlement is definitely worth considering.
Be Debt Free in 2010!
