Disclaimer- No content on this site should be considered legal or financial advise. Please consult an Attorney or trusted Financial Advisor before acting on any legal or financial issue.
Overwhelming debt can affect more than just the credit rating; it can affect the stress level and all aspects of the personal financial situation. Credit counseling and debt settlement are two ways that a consumer can get out of a bad debt situation. There are many differences between the two different approaches to high debt levels, as well as a few similarities. Here are the main differences between credit counseling and debt settlement services:
Credit counseling or debt counseling, as it is known in some areas are services that come from certified credit counselors that teach consumers how to manage debt that they are unable to pay on their own. Techniques are taught to the consumer that can give the debtor the tools to find their way out of the spiraling debt. These tools include different techniques that are used to repay debt, as well as advice to the order in which the debts should be repaid. Money saving techniques as well as a focus on personal finances is focused on throughout the process of completing the debt management program.
Credit counseling allows the consumer information that can help themselves to create a plan of action while using services and recommendations from the debt management counselor. The credit counselor uses terms which are outlined in the credit contracts to find creative ways to repay the debt and may suggest that an increase in income is necessary to complete the debt repayment process.
Debt settlement services differ, in the fact that the debt settlement agent acts as a liaison between the creditors and the debtor. The debtor can benefit from debt settlement services, as one single payment is collected at a time each month that is convenient to the debtor, compared to multiple high interest payments that are demanded from creditors on a monthly basis.
When choosing debt settlement, it is important to ensure that minimum monthly payments are being made to each creditor
