There are many variables when trying to distinguish between credit counseling vs debt settlement, but in this article we only going to discuss the glaring difference between the two main factors that should be considering when you're weighing the pros and cons of both.
1. What is your budget? The purpose of credit counseling is that you get the DMP or debt management plan, and most credit counselors, who are non-profit, have suggested a monthly service donation of $ 40 to $ 60. So in the long run credit counseling can cost you more, but debt settlement also comes with its monetary risks and disadvantages, because when you enroll in a debt settlement program, your stop payment to your creditors and your creditors May choose to sue. Although some debt settlement organizations will charge you a fee in advance and can also have monthly service fees, credit counseling, it is generally more expensive route.
2. How will this affect your credit? Credit counselors report that credit counseling and DMPS have a negative effect on your credit rating. This may be true, the result can not be lowered as a result of credit counseling, but it will show up on your credit report that are or were in some kind of credit.Program debt with other settlement will bring some negative effects on your credit report, for the purpose of debt settlement is to stop making payments to your creditors on your behalf inventories pile up funds for a one-time payment. Credit counseling is definitely a better choice if your credit is your highest priority.
3. How long do you have? There are several types of aggressive creditors who refuse to meet with you (eg, Discover or Capital One), if you have a lender who would refuse to discuss with you May want to look into going into credit counseling. On the other side of that coin, the same lenders may refuse to cut interest rates if you are enrolled in a debt management plan, in which case you May have to go bankruptcy or time, or at least threaten to file bankruptcy. A good advisor will know exactly which of your creditors will be ready to play ball and they will hold, so it is important to find out as much financial information with your credit counselor as much as possible.
4. What kind of person are you? Counseling May be a little easier on the heart, because debt settlement is a little roller coaster ride because there is absolutely no guarantee that it will work and you could end up getting sued by your creditors. So if all that frightens, try going consultation time.
It all boils down to what you're happy with, if you really think you have nothing to lose, and you are very close to bankruptcy, and not harmful to the risk of a debt settlement may be the best bet for you. If you are adverse to risk and nurture your credit, but perhaps credit counseling might be in your best interest, but as we mentioned earlier what type of debt you have is very important, because if you have 100% of a lender who will not settle, you will probably be better than with credit counseling.
