When Should A Borrower Choose Debt Settlement And Credit Counseling?
When Should A Borrower Choose Debt Settlement And Credit Counseling
?
Many things comes in scenario when people actually talk about credit counseling and debt settlement but below given are the few main differences which should be taken note before availing consumer credit counseling or debt settlement services.
Borrower's budget
The main aim or a credit counseling plan is to get involve in debt management plan and most of the credit counselor would charge $40-$60 as a monthly service donation. Thus in the long run credit counseling may cost more but debt settlement would not. Many debt settlement organizations provide affordable services and they even have low monthly services fees and no upfront fees. Loans store provides debt settlement services and help the needy debtors in their tough times.
Will the credit score be affected?
Usually the credit counselor says that a debt management plan doesn't have a negative effect on the credit score and it's a sheer fact. The score might not be lowered and it will show in the credit report that the debtor has enrolled in a credit counseling course from a non profit credit counseling agency. Even the debt settlement doesn't have a negative effect on the credit score. Thus people can choose any of this option to emerge out of debts.
Type of debt
A debtor should know which type of debt he has, this is very important in choosing the best debt relief service for him. There are many violent creditors who usually refuse for debt settlement, if the same thing happens with you than you go for credit counseling. If your creditor is refusing the debt settlement then its time for you to switch to credit counseling. On the other side, the same creditors would refuse to lower the interest rate if a person is involved in debt management plan thus the only option available for him is filing bankruptcy.
But this should be avoided; the borrower should choose credit counselors who are ready to guide them in each and every step. The borrower should disclose all the information to his creditor; he should not hide anything from them so that they would be able to take the right decision.
If a person thinks that he has nothing to lose and he is very close to filing bankruptcy than he should go for debt settlement, it's the best option for him. But before choosing the best debt relief option, one should know what kind of debt he has and he should also know his budget.