| There is a harp line of difference between the two | | | | payment. You will then have to issue one single |
| debt relief strategies namely debt settlement and | | | | payment which is lower that what you used to pay |
| credit counseling. While settlement attempts to | | | | and the agency will pay out the creditors with that |
| eliminate debt that you have by a huge percentage | | | | money. The interest reduction may not be significant |
| of 50% and above, the method of credit counseling | | | | but however, it is a reduction. You will actually be |
| aims at reduction of the interest rate. Counseling | | | | paying all the money that you owe and there will be |
| requires repayment of the debt in full to all your | | | | literally no savings. The process will take some 5 |
| creditors with reduction in interest rate and a | | | | years or more to eliminate debt completely. |
| remodeled repayment scheme. | | | | Debt settlement: |
| Credit counseling: | | | | In debt settlement, you will have to hire a settlement |
| In credit counseling you need to first hire an agency | | | | firm which will advise you to go delinquent and save |
| offering consumer credit counseling services. You | | | | the money instead of spending it. The negotiator |
| need to be careful while selecting a legitimate one. | | | | from the company will contact the creditor and |
| Some counseling agencies have a nasty habit of | | | | negotiate on your behalf and eliminate the debt that |
| showcasing themselves as non-profit. Actually they | | | | you have by at least 50% and up to 70%. This can |
| make enormous profits and at times they force you | | | | take as long as 1-3 years. Once the settlement deal |
| to pay voluntary fees which is way beyond your | | | | is signed, you need to make lump sum payment to |
| reach. If an agency claims to be non-profit ask it to | | | | the creditor and get rid of the debt or you can |
| prove the same. If the agency shows the Internal | | | | actually get an installment scheme ranging from 2-6 |
| Revenue Code 501 (c)(3), which is issued by the IRS, | | | | months. The money that you save by going |
| you will know that the agency is non-profit and you | | | | delinquent will now be used for repayment. There will |
| can trust the same. | | | | be a significant amount of saving, a certain |
| The agency will then check out all your financial | | | | percentage of which you will need to pay as a fee |
| credentials and will send representatives to the | | | | to the settlement company! |
| different creditors you have. These representatives | | | | Debt settlement is the best alternative to filing |
| will negotiate with the creditors to reduce the | | | | bankruptcy and the new regulations have made the |
| interest rate and re-schedule payments for you. The | | | | process a much better deal for consumers. |
| creditors will generally agree and re-amortize the | | | | |