Debt Settlement Companies Vs Credit Counseling - Which Option Makes More Sense?

Debt Settlement Companies Vs Credit Counseling - Which Option Makes More Sense

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It's pretty hard to make up your mind on a debt relief method since there are so many. This article will help you by showing the advantages and disadvantages of debt settlement and credit counseling.

What most people don't know about debt settlement is the fact that the program is supported by the government. This gives the program a great legal base and you can be sure that it is not a scam or a trick to get rid of your debt. The government pays the creditors with the amount the debt settlement company negotiates to reduce. This will ensure that you will afford paying the rest of the amount since it is smaller. This is a great opportunity for people who already have part of their debt saved up, but are paying installments each month. After the negotiations they are allowed to pay the rest of the debt, tax free, with no high interest rates in a lump sum. That is great and they will save even more money than before. Another good thing about debt settlement is the fact that some companies give free credit counseling before you decide to hire them or not. So, you can actually get both these options at the price of one. That's amazing and it will help you make a better decision.

Credit counseling is practically analyzing your financial situation. The counselor checks your credit report and helps you come up with a payment plan for your creditors. They also tell you how to save each month and give you tips on how to improve the financial situation. Overall, credit counseling is like therapy, only you are having therapy for your financial behavior, which is also analyzed and taken into consideration. What makes credit counseling have a disadvantage compared to debt settlement is the fact that you won't get any reduction if you hire a credit counselor. You just receive advice, but the amount you have to pay remains the same.

Of course, sometimes debt settlement doesn't work for some people, like the ones who have less than ten thousand dollars of debt; in such situations, credit counseling can be a good option. However, when comparing the two options, you have to agree that debt settlement is the smartest one.

Debt settlement is a legitimate alternative to filing bankruptcy and often makes sense for consumers on the verge of bankruptcy. There are also other debt relief options available so it would be wise to speak with a debt relief specialist to go over your different options.

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