Debt reduction has become a popular way of eliminating your debt. But if you are looking for a service to help you manage your debt, credit counseling is also being used quite a bit in recent days. But it is not some much that you just get to pick one of these types of services; it is more about which type of service is going to meet your financial needs.
The big difference between credit counseling and debt settlement is with credit counseling, you are paying your credit card balances in full and paying a lower interest rate. With debt settlement, the total amount owed on the balance is reduced. And for this reason your credit score will stay pretty much intact with credit counseling and will most likely be negatively impacted with debt settlement.
If you are able to make a 2 percent payment each month, credit counseling is a better option for you, although it will cost you more in the end. Debt settlement works better if your payments are more than 3 months behind. Some people who have an extremely large amount of debt may also opt to used debt settlement as a way of paying off their debts.
I would consider credit counseling the better of the two options, if you are able to make the minimum payment. All your debts are consolidated and you make one payment to your credit counselor each month and they disburse it to your lenders. But if you cannot make a 2 percent payment on your accounts, credit counseling is not going to work for you.
There are a number of debt management companies that offer both types of debt relief. They offer a free consultation and the debt management company helps you decide with debt relief alternative will work best for you. Debt settlement and credit counseling will both get you out of debt. It is important that you understand the pros and cons of both before you select a credit card debt relief option.
