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Credit counseling programs vs Debt settlement programs which is a wiser decision for your financial situation?

By plrprousers | May 8, 2009

Were all aware that we here in the USA are trapped in the midst of a terrible recession.  Without having to mention this is causing tremendous loss to many Americans.  There are an increasing number of foreclosures plus elevated levels of unemployment.  As if that wasn’t enough credit card debt is at an all time high.  This is leaving millions of people in positions with their debt that is very hard to cope with.  Somewhere along the line people start thinkning about reaching out and getting some assistance with their debt situations when they realize that there are not too many options on the market to help them.  The two most popular of credit card debt reduction plans are credit card counseling programs occasionally referred to as a debt consolidation program and credit card debt settlement sometimes referred to as credit card debt negotiation.  

The two of these programs do have the ability to get people out of debt much faster than if they were to just stay put on the credit card debt treadmill and continue to make monthly minimum payments.  But both of these plans are very different from each other.  

A credit counseling plan has very lucrative benefits; one being they can usually get the interest rates decreased.  Another extremely nice part of this program is that you will make merely one payment a month to the credit counseling firm in which they pay out to your creditors for you; thus making your life much easier with paying your bills.  Usually a credit counseling program can last anywhere from 5-8 years to become debt free.  

Credit card debt negotiation is a much different kind of a procedure.  For starters you actually lower your debt not your APR.  So you end up saving a lot of money, in most situations the debtor will see a savings of fifty percent or more from how much they owe the creditors.  Another extreme difference from a credit card counseling plan is that you will become debt free much faster with credit card debt settlement, usually no more than three years.  But there is one downside, in order for the credit card companies to be willing to work out a debt settlement the credit card accounts must go into default; the creditors will not negotiate when you’re up to date with the payments.  So this does have a derogatory effect on the credit report.  

The damage done to the credit history is not permanent though and it will rebound towards the conclusion of the debt settlement program.  But for most Americans in credit card debt one of the two programs mentioned above will be of assistance.  Those debtors who have no real issue paying their minimum payments right now should look into credit counseling; but those who have a lot of credit card debt and have a rough time managing to stay current then credit card debt negotiation would be a better route.

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