Free Credit Counseling – What’s the Difference Between Free Credit Counseling and Debt Settlement?

The growing competition in every field of life has made it mandatory for every service provider entity to incorporate the element of variety in the services they offer. The same is the case with the Debt Settlement firms; though it has a lot to do with the desperation of the creditors too, where they have sort of compromised to a level where they have started to contend themselves with what ever they can get back from the debtors. That makes it possible for the firms to offer variety of Debt Relief options to choose from, which includes Free Credit Counseling or Debt Counseling and Debt Settlement.

Debt Counseling is a program that is very popular these days, as in this program the debtor gets to pay the total amount it owes to the creditor according to the laid down payment plan brokered through the firm. The professionals in this program analyze the debt to income ratio of the debtor and in context of that prepare a payment plan and educate the debtor how to avoid living on credit. The payment through this program also results in the reduced interest rates, and the firm deducts its service charges from the cuts at the interest rate.

Whereas in Debt Settlement the debtor financial condition is a key factor because it is only suggested when the debtor can not pay on regular intervals; because this program has huge financial relaxations but that comes with some negatives as well, the debtor here gets to pay less than what actually owe to the creditor but this will result in addition of negative credit history of the debtor because the full amount is not paid. The firms also charge an upfront fee for this program too. Nothing is perfect in this world and same is the case with these programs both have certain pros and cons.

Each program is considered under a certain condition that is directly related to the financial stability of the debtor; if the debtor can manage to save a certain amount and pay it for the debts to the creditor then Debt Counseling is suggested, where as in case of unstable financial condition of the debtor the Debt Settlement is recommended.

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