If you're in debt, you probably need to get debt help to get yourself debt free and back on solid financial footing. This is a long term process that should not be rushed, please think twice about joining a debt settlement program or counseling program or check our list of A+ counseling agencies or settlement companys, know your options and "what will happen".
Credit Counseling: a program for reducing monthly payments, where a consumer is placed on a "Debt Management Plan" to repay their bills, frequently at a reduced interest rate.
Debt Consolidation: a loan, provided to consolidate debts into one loan with one payment, typically shifting credit card debts to secured debt by refinancing a mortgage.
Debt Management: a service provided by an agency that provides debt help services, including credit counseling, debt settlment, and debt consolidation loans.
Debt Settlement: a program for negotiating consumer debt to the lowest level, typically with a low monthly payment, while avoiding bankruptcy.
Debt settlement programs (see more)
Some companies now claim they can negotiate a one-time settlement with all of your creditors that will reduce your principal by as much as 50 to 70 percent. By doing this, they say, your monthly payments will drop dramatically.
Yes they advise you to stop paying your creditors to show financial hardship so yes they are coming clean with their promises but yet hurting your credit and charing you fees or percentages of debt savings. They are a for-profit business.
With a legitimate credit counselor, there is no right answer for everyone. They sit down with you and give you a free and objective assessment of your financial situation.With a customized consolidated payment plan you should be able to pay off your credit card debt in 3 to 5 years or less. You write the counseling agency one check each month and they pay all your creditors which is your minimum on each creditor less any interest fees becasue of the relationship the creditor has with the agency. But beware if you skip a payment they have he choice to kick you out of the program (the creditor).
Do your homework
Facing mounting bills can be frightening, but getting debt relief is not a decision that should be based on hearing a radio commercial or getting a sales call. You want to find an organization that will design a debt relief plan specifically for you.
Shop around. Compare a couple of services and get a feel for how they operate. The credit counselor should spend at least 20 to 30 minutes with you in order to get a complete picture of your finances. If they don’t do that, you’re not really getting any counseling.
Ask a lot of questions and get those answers in writing. Find out about the fees. The Consumer Federation of America says you shouldn’t pay more than $50 for the set-up fee and no more than a $25 monthly maintenance fee. If the agency is vague or reluctant to talk about fees, go someplace else.
Don’t rely on names or the claim of a non-profit status. Check them out with the Better Business Bureau or your local consumer protection office.