Credit Card Debt Management Services
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Credit card debt management services seem to be everywhere right now. There are two types of debt relief services and they are consumer credit counseling and debt settlement. There are a lot of differences in these 2 types of debt relief. And there are several different factors that will determine which one will work best for you. It may even work best for you to use some version of both of these methods depending on how much debt you have and how long it has been since payments have been made on the debt.
The big difference in these 2 services is enrollment in credit counseling will require you to pay your balances in full and debt settlement will reduce the amount of the balance owed on the debt through a negotiation process with the lender. Credit counseling will mostly leave your credit intact and debt settlement will affect your credit negatively. But if you are considering debt settlement, your credit has most likely has already been affected.
If your debt is current or very recently past due, you are probably going to be better off with credit counseling as long as you can make a 2% payment each month. They consolidate your consumer debt as well as some other unsecured debts and you will only have to make one payment each month. Your interest rates will be reduced and you will be paying 10% or less on most of your accounts. There will be a monthly fee of $30-$50. This may sound like a lot, but if you look at what you are saving in interest, you are coming out much farther ahead. This type of debt management plan will take 3 to 5 years to complete.
If your debt has not had a payment made on it in 3 months or more, the damage has been done and you may just want to go ahead and settle the debt to get rid of it. Because this option does not repay the balance in full, it will not be kind to your credit. Once you have reached a point where you are falling further behind, it is time for drastic measures and that would be debt settlement. The process can be done by a service or by you. If you are serious about getting out of debt, it may be a good idea to negotiate with the lender on your own so that all your available cash can be put towards paying off your financial obligations.
Credit card debt management services can assist you in getting your debt paid off, but it is important that you understand the difference between the different debt relief services and how they can help you in becoming debt free.
