Whats the difference between Credit Counseling and Debt Settlement?
Here is the primary difference between the two: with credit counseling, you pay back the entire debt at a reduced interest rate. With debt settlement, you pay back a percentage of the principal balance. So with debt settlement, you can become debt free much more quickly – usually in 2-3 years. Credit counseling can take you from 5 – 9 years. Credit counseling usually works best if the debt(s) have not been charged off or have not yet gone to collections and you must have the ability to make monthly payments. Debt Settlement works best if you are suffering a financial hardship and can no longer make the required payments (even at a reduced interest rate). If you miss a payment while participating in a credit counseling program, the creditor can elect not to participate any longer and can go back and retroactively charge you past interest and fees.
