Credit counseling or debt settlement - which option is best for you?
Learn the benefits, pros and cons of credit counseling vs debt settlement to help you decide which service is best for you.
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Credit Counseling vs Debt Settlement
Both programs offer consumers a way to repay their unsecured debt. To decide which program is best for you, apply for both and review each one's plan specifically designed for your unique circumstances.
What is Credit Counseling
A process where a third party negotiates with creditors and establishes a payment plan on behalf of the debtor. The fact that a person is in credit counseling may be reported to the credit bureaus and listed on the credit report. Credit Counseling; however, is more preferred by creditors than debt settlement, and it can help improve or lessen the damage to your credit score.
What is debt settlement
Debt Settlement, or debt negotiation, is the act of contacting your creditors and negotiating a reduced payoff of your debt. It is not uncommon to pay 50% or less of the principal on your debt as settlement in full. This will save you more money in interest and principal payments than any debt relief program outside of bankruptcy. You should keep in mind, however, that some creditors will likely report your settlement to the major credit bureaus. However, when trying to get out of debt and to protect your credit as much as possible, debt settlement can be the most economical option for you.
Credit counseling and debt settlement
Consumer credit counseling
(also called debt management):
Your debt is combined into one lower monthly payment to make it easier for you to meet your financial obligations.
Debt Settlement (also called debt negotiation):
The principal balance of your debt is negotiated to reduce the balance owed and get you out of debt faster.
Don't know which debt program is best for you? Compare credit counseling vs debt settlement to help you decide which one offers the best benefits for your situation.
Whether you choose a credit counseling agency or a debt settlement company, either program can only help you with unsecured debt. Find out what types of unsecured debt qualify.
Debt - As many as a third of consumers hide their debts from other family members. Men may be more likely to hide personal debts from their partners and do not tell them how much they really owe. Hidden debts can accumulate quickly just through pre approved credit card offers. Many times one partner completes those credit card offers without the other partners knowledge. Store cards and credit cards appear to be the most common way that hidden debts are acquired.
No matter how debt happens, getting control of debts is the most important thing to do. The average consumer usually has up to five or more credit cards and owes around five thousand dollars on just one card. One option is to do a balance transfer to a 0% or low introductory card. This can eliminate shuffling all those credit card balances and only have one card balance due each month. However, when a consumer's plan is not working, using a debt professional can help.
Debt professionals use several ways to help consumers get control of debts. There is debt consolidation, debt settlement, and credit counseling services. Knowing which service is best for your needs can also be determined by the help of a good professional. Millions of consumers are in debt and are not doing anything. Credit scores are more important than ever, ignoring debts is not a good idea and it can lead to more debt trouble and bad credit scores. Start early before debts are 60 days late and get on your way to being debt free and stress free. Getting out of debt can take time and sacrifices may need to be made until finances are on track.
One of the best tips for those who are in debt, is to stop spending money! Get out those bills and total what you really owe. Review all the minimum payments due and plan on paying more for each one that you can. Get a second job or find money in your budget by eliminating or reducing some bills. For example, cut cell phone plans, cancel club memberships, reduce the TV cable plan, and eliminate some hobbies until debts are payoff. It can time and effort to get control, but better credit scores and a less stressful life are the benefits.
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Review information was gleaned from the website, and is neither an endorsement by us nor an confirmation of content nor a warranty of any promises made by the website. Use the review information at your sole discretion and sole liability.
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CareOne Debt Relief ServicesSM lead the industry in helping people get out of debt the smart way. If you're feeling overwhelmed, you're not alone. We've helped over 4.5 million people and we're here to help you.
All About Debt Consolidation Options - What are my choices?
Unlike other providers, we are able to provide you with multiple debt consolidation options to help you become debt-free. You'll be able to consider both a debt management plan and settlement. We'll provide you with a personalized solution based on your situation and you won't need to worry that you are being forced into a solution that doesn't work for you.
What is a Debt Management Plan (DMP)? A DMP offers significant interest and time savings* and provides you with a plan to repay your debts in five years or less. You'll be able to consolidate all of your unsecured monthly payments into one, easy payment. The DMP is not a debt consolidation loan where the equity in your home is used to pay down your debt.
*The savings are based, in part, on the average of a recent sampling of annual interest rates charged by creditors that participate in our plan and an assumption that only minimum monthly payments are made.
What is Debt Settlement? Debt Settlement is a negotiation by a settlement service provider or lawyer with your creditors to pay back a portion of your unsecured debt. You make monthly deposits into a debt settlement account in an amount you can afford. You do not make monthly payments to your creditors. When settlements are reached with creditors, settlement payments are paid from the debt settlement account. Settlement will have a negative impact on your credit.
Choosing a Debt Consolidation Provider - CareOneSM providers are proud to have helped over 4.5 million people tackle their debt. As you choose a provider, be sure to check their reputation, such as their rating with the Better Business Bureau (BBB). Beware of providers that are less than reputable - their high fees and unethical practices can you leave you in a worse financial condition than when you started.
If you are struggling to keep up with your monthly credit card payments, a Debt Management Plan (DMP) with a CareOneSM service provider can help by consolidating all of your unsecured debt into a single monthly payment. We negotiate with your creditors for better repayment terms, such as lower interest rates and waived late fees, which can save you considerably each month.
Our DMP includes comprehensive debt counseling from certified counselors nationwide, superior customer service, and technical expertise. When you successfully complete our plan, you will have fully paid off all of the unsecured debts you started the plan with, and will be armed with the knowledge necessary to manage your finances on your own. Bankruptcy is usually a last resort to debt consolidation that involves a complex legal process created by Congress to provide relief from financial distress when you can no longer pay even a portion of your debts. Once we review your situation and if bankruptcy appears to be appropriate, we will connect you with a national law firm to help walk you through your bankruptcy options.
Debt Consolidation is a widely-used term to describe debt repayment plans* that allow you to get you out of debt as quickly as possible.
There are really two types of debt consolidation plans available in order to provide these benefits - a Debt Management Plan or a Settlement Plan. There are important differences between these plans that you should understand.
So which plan is right for you?
Determining which plan is right for you really depends on your specific situation including the type of debt you have, your income and ability to make consistent payments, and what you agree is affordable.
Within this guide, we'll walk you through your options so that you can understand which path works best for you. We invite you to explore both programs and learn how they work, who they are designed for, and what are the pros and cons of each.
As providers of CareOne Debt Relief Servicesฎ, we are committed to delivering realistic solutions that can make financial freedom a reality.
Call Us Now! 1-888-888-CARE
Review Disclaimer:
Review information was gleaned from the website, and is neither an endorsement by us nor an confirmation of content nor a warranty of any promises made by the website. Use the review information at your sole discretion and sole liability.
Debt collection services may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts. You can stop a debt collection service from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. The debt collector or your original creditor could still sue you to regain what is owed to them.
Know Your Rights: Even though you do owe money, you still have rights. There are certain things debt collection services cannot do when trying to get you to pay. Even though there are laws against it, some companies will break the rule, thats why it is important to know your rights. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, collection services may not use threats of violence or harm, publish a list of consumers who refuse to pay their debts, use foul language, or even call and harass the debtor.
Debt collectors are also not allowed to make any false statements to you. For example, they may not misrepresent the amount of debt you owe, claim that you have committed a crime, or even indicate that any papers you have, or will receive are legal forms, if they are not. Debt collection services are not able to seize your goods, or threaten to seize or garnish your wages, or remark you will be arrested if you do not pay your debts.
Report any problems you have with a debt collector to your state Attorney General's office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General's office can help you determine your rights. Knowing can give you the upper hand, and keep you out of fear of debts and debt collection services.
Chargeoff credit card - How to charge off credit card balances yourself, or get professional help from a debt settlement company.
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How Creditors Sell Debt to Collection Agency Companies - *They gather information about their debtors, including each debtor's name, last known address, phone number and contact person. *They study different collection agency styles. Some agencies pay a flat percentage of the debt owed and the creditor no longer has any influence in what happens with the debt. Others collect and retain a percentage and forward the rest to the creditor. *They contact several collection agencies that use their preferred method and get quotes about debt purchase. Putting several debtors together in a package deal might entice the collection agency to pay a higher rate for their debt. *They examine terms. Before agreeing to sell their debt to a collection agency, creditors examine what the collection agency will do in return. *They transfer all debt records to the collection agency. If debtor contacts the creditor after the debt-transfer sale, they refer the debtor to the collection agency.
