There are a lot of people in debt trouble these days and that means they are all looking for a solution to their problem. Advertisements in the media promote many potential available solutions. Some have great value and are worth exploring. Yet, it is important to make the right selection based on your own individual needs and situation. What may be a positive solution for one person may be an inappropriate solution for another.
Case in point, some people may be well advised to explore credit counseling solutions while other people would find it a much better plan to look towards debt settlement. There are huge differences between the two. You do not want to enter into credit counseling if no counseling in the world could possibly guide you out of the situation you are in. Similarly, you do not want to venture into something as complicated as debt settlement if credit counseling could provide a simple solution.
Either way, if you are in a tough situation where your credit card debt has reached critical levels or your interest rates are very high, you need to find an effective solution to your problem. Really, you are not alone in this situation. Many people will point out that they must contend with serious debt issues that derive from two scenarios:
The desire of people to engage in reckless credit card credit card borrowing well past a sensible point of responsibility was one factor. The growing unemployment crisis combined with the collapse of the housing market would be another. Regardless of the reason that you ended up in such a situation, you need to find a way out of it. If you do not then you will suffer from the serious issue of perennial debt. No one would want to remain in a situation such as that. The problems that derive from it are just too serious.
This has opened the door for service providers able to deliver solutions to such issues.
Credit card counseling has proven to be a tremendous way in which people have been able to reduce their debt. A solid credit counselor will take a very close look at your budget and come up with a particular plan you can follow each and every month.
It may even be possible for the counselor to work with the credit card companies and seek to reduce the amount of interest rates you pay. The counselor might also have the ability to reduce the monthly minimum payment to make it more manageable.
Payments will no longer go to the credit card companies and will instead go to the credit card counseling service. This way, the service will collect its fees and issue payment on your behalf. That way, the payments always get to where they need to go on time.
Just beware of one fact: there is virtually no regulation in the credit card counseling service industry. There are quite a few solid services that come in the form of nonprofits and then there are those that are for profit. You just need to separate the legit companies from those that are scam oriented.
Before signing on with any company for credit card counseling, perform some basic research. You want to hire a company that has been well reviewed and has no serious problems reported with its service. Double check online reviews and check out Better Business Bureau rankings. This will help you avoid such problematic services immensely.
Debt settlement is a completely different venture altogether. This is a process reserved for those that might not have any other options available to them. Basically, this is a process performed so as avoid ending up in bankruptcy.
As the name implies, debt settlement refers to making a payment offer to settle the money owed. If you owe $6,000, you could make a settlement offer for $3,500. Once the settlement has been paid, the account is closed and your debt is wiped out. Payment can come in the form of a single lump sum payment or a series of payments. Often, three payments will be the maximum amount.
Some may wonder why a lender would agree to a settlement. The answer is to get more than they would get if the client were to enter into bankruptcy. If the borrower files for bankruptcy, the ability to pay back debts could be reduced by the courts. The lenders certainly would want to avoid a scenario such as this.
For the borrower, this is not a perfect solution either. Debt settlements will certainly wreck havoc on a credit rating. However, it will do less damage than bankruptcy and does not entail all manner of legal wrangling. It will require negotiations which some may find to be more than a little difficult to take part in.
That is why they may turn to a debt settlement negotiation service. This would be a far better plan than trying to muddle your way through negotiations on your own. Hire qualified professionals as they can deliver much better results. Keep in mind, the lender really has to be convinced you have no other option or a debt settlement approval will not be likely.
Both credit card counseling and debt settlement have their benefits. The key is picking the right option for your situation since you want the best possible outcome. You do not want to muddle through options that are less than effective. Regardless of the method you pick, they could both be better options than remaining stuck in debt.
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Mirsad Hasic enjoys writing about credit card consolidation and how to stay out of debt.