What you need to know about credit card debt settlement and credit counseling

Welcome to my Hub Page. I would like to help you understand the differences between debt settlement and credit counseling. A credit counseling agency will attempt to lower the interest rates on all of your accounts. Then you will make one monthly payment to credit counseling agency, which they will pay your creditors each month for you. What most people don't know is that your creditors are going to report you to the credit bureaus letting them know that you are in credit counseling program so this does read very negatively on your credit report. In addition although your creditors may lower your interest rates they are also going to report you in collections by a third while you are in the program. So, in most cases you credit does take a big hit. Another drawback is that it will take you between 4-6 years to complete the program and by that time you will have paid back about 120 to 130% of what you owed. With a credit counseling program if you miss one payment they will kick you off the program and will not let you back on for at least one year. Then you will be right back in the same situation if not worse. Remember your main objective is to save money and get this put behind you as fast as you can so you can start to rebuild your credit.

Now onto debt settlement. When you are using a good debt settlement company they will reduce your debt by negotiating directly with your creditors. If the company knows what they are doing and has your best interest in mind you can save at least 40% to 50% of what you owe today. When you are in a debt settlement program you don't want to look at it like a loan by seeing how long you can extend the payments. In order to save yourself the most money you need to look at it as how fast can I get this paid off. If you really want to save yourself the most money and get back to building up your credit then this is what you need to do. There are two types of companies involved in debt arbitration, about 85% of the companies are pretty new to the bussiness and really have not put in the years to build a reputation on their settlements. If you find a company that has been around less then three years then you won't no what they can do for you. A debt settlemet program is usually 2 to three years to complete the process to becoming debt free.

Now I am not saying that all debt settlement companies are good or bad and are not there for the right reasons. A lot of the are in this business just to make money at all cost and do more harm then good. Just like I tell my all my clients don't take my word for it. When dealing with any company it is your responsibility to do your homework. There are too many companies out there who could care less about you and just want your money. They sell you on the idea that everything is going to be really easy and not to worry about it. You have to understand that it does take a lot of work on behalf of both you and the company. Some companies will tell you in the first few minutes of a call that they can help you and all you have to do is pay this amount and sign the contract today to get started. STOP right there if that is the case with any company. How can they tell you definitely what your payment will be without reviewing any of your statements? I hear it on a daily basis how a company told them they could help them get out of debt only to find out 1 year later that they cannot work with the creditor. Now you have paid all that money and are even worse off now than when you started. Please make sure the company has a good reputation because there are companies out here that what to help you succeed and get you out of debt.

When you find a company, make sure that there a credited company with the BBB and that they are in good standings. You also want to see how many complaints have been reported to the BBB. What you also need to realize is that even if a company has complaints it is sometimes from old employees who have been let go or fired, they also can come from competing companies. You never can be sure but if they have a lot of complaints you should do more research on them. Never go on a program that is going to exceed three years because that is not going to benefit you in the long run. Remember the faster you pay of your debts the better chance you have to save a lot of money. Don't be affraid to ask them to see some of the letters from the creditors on their recent settlements. Some companies will show you just a couple of settlements letters from 1, 2, or even 3 years ago, ask to see the recent ones. most of the time they will show you a couple of letters with the highest settlements but that is not really going to show you their overall average % on them. Ask to see at least 30 or more. Remember the saying you get what you pay for. So don't be fooled by a company that is telling you what you want to hear and is making it out to be a walk in the park. It takes both sides to work toghter and come up with the right plan that will get you out of debt and save you the most amount of money.

If you would like more information on your situation or just need some advice you can always contact me. Here are some of the frequently asked debt collection questions and practices. If I cannot help you at least I can point you in the right direction. You can check out my links in the artical or down below. Please leave a comment or question and I will respond back. Thanks for stopping bye and I will post a new Hub shortly.

Joe Sellers