Online Calculator | Consumer credit counseling vs Debt negotiation which is more suited for your financial situation?

Consumer credit counseling vs Debt negotiation which is more suited for your financial situation?

Unless you have been living in a cave your must be aware that we here in the United States are stuck in the midst of a mind numbing recession.  Needless to say this is causing severe loss to many people.  There are an ever rising number of foreclosures plus high levels of job loss.  As if that wasn’t enough credit card debt is at an all time high.  This is leaving behind millions of people in situations with their debt that is very compromising.  Somewhere along the line people start thinkning about reaching out and getting some assistance with their debt situations when they realize that there aren’t too many options available to them.  The two most popular of credit card debt relief programs are credit card counseling programs sometimes known as a debt consolidation plan and credit card debt settlement often times known as debt negotiation.  

Both of these processes do have the capability to help people get out of debt much faster than if they were to just stay on the credit card debt treadmill and pay monthly minimum payments.  However these programs are very different.  

A consumer credit card debt counseling program has very nice benefits; one being they can normally get the APR to within reason.  Another extremely nice benefit of the plan is that you will just make one monthly payment to the credit counseling company in which they pay out to your creditors on your behalf; thus making your life much more simple with paying your bills.  Normally a consumer counseling program will take anywhere from five to eight years to become debt free.  

Debt negotiation is a much different type of a procedure.  For starters you actually reduce your debt not your interest rate.  So you wind up saving a lot more money, in many cases the debtor will see a savings of 50% or more from how much they owe the creditors.  Another extreme difference from a consumer credit counseling program is that you will be debt free much quicker with credit card debt settlement, typically no more than three years.  However there is one downfall, 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 credit card companies will never negotiate when you’re current.  So this does have a adverse effect on the credit history.  

The damage done to the credit history is not permanent though and it will go back up towards the conclusion of the credit card debt settlement program.  For the vast majority of Americans in credit card debt one of the two plans reviewd above will help.  Those folks who have no problem paying their minimum payments on time should look into credit counseling; but those who have huge sums of credit card debt and have a tough time managing to stay current then credit card debt negotiation would be a better road.

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