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Consumer Credit Counseling and Debt Settlement 101 - Debt Relief Help in Plain English

The first step to seeking help is to understand your debt relief options. As consumers continue to struggle with mounting debt, many are looking for help but are unaware of the different solutions available. This lack of awareness can make consumers feel vulnerable and consider debt counseling services to be suspect. Debt relief does not have to be confusing, and educating yourself can appease concerns about being mistreated.

There are several debt relief options available, but the two most successful and commonly used ones are credit counseling and debt settlement:

Consumer Credit Counseling 
Consumer Credit Counseling is a planned method of debt relief. It involves financial counseling to educate consumers on managing and budgeting their money as well as helping them pay off their debt responsibly through a Debt Management Plan (DMP). Through a debt management plan, you can pay one consolidated monthly payment to the credit counseling agency, which then distributes it to all your creditors. In addition, creditors may agree to reduce interest rates and waive over-limit fees and late payment penalties. Credit counseling is not a quick fix and usually takes 3-5 years to complete. Though the fees and rates may be reduced, it may also require a significantly higher monthly obligation since you are still paying back the principal in full. Therefore, enrolling in a debt management plan may not be appropriate for everyone, and debt settlement can be another debt solution to consider.

Debt Settlement 
Debt Settlement involves reaching negotiated settlements with your creditors to get significant reductions on the principal amount that you owe. It's the fastest and most aggressive way to get out of debt. You can get rid of as much as 40-60% of your total debt and become debt free in 1-2 years. For consumers with a large amount of unsecured debt (usually greater than $10K) who are unable or only able to make the minimum monthly payment, debt settlement is a viable solution. It does, however, have a negative effect on your credit score. This is in contrast to consumer credit counseling, which will not hurt your credit score and helps you pay down debt responsibly.

Next Steps: 
To start off, the best and easiest thing to do would be to first get in contact with a legitimate debt counseling company and get a free consultation to go over your expenses and determine the best solution customized for your situation. 

For more information, you can visit our credit card debt relief site, which serves as an online resource for debt relief candidates seeking consumer credit counseling and debt management advice. 

For more information, please visit: Credit Card Help