If you're considering debt negotiation, be sure you compare debt negotiation vs. credit counseling, and know what you're getting. A good credit counseling agency can go a long way toward helping you resolve your debts, so be careful choosing an agency that can help you.
Debt Negotiation
When you compare credit counseling vs. debt negotiation, you'll see that debt negotiation is neither a debt management plan nor does it offer the benefits of true financial counseling. Debt negotiation firms typically make outrageous offers of reducing your debt by 50% or more. They charge you administrative fees to contact your creditors and negotiate a partial payment, and they may require you to cease communication with your creditors entirely. They typically have you pay the debt negotiation firm a lump fee, which they then distribute to your creditors after deducting their administrative fees.
Debt negotiation plans can be bad news for consumers. What debt negotiation firms don't tell you is that their efforts can negatively impact your credit report. A creditor may write off your account as a charge off, or only partially paid. You could face monthly late fees that make your credit debt skyrocket. Creditors don't have to accept debt negotiation plans, but a debt negotiation firm won't necessarily tell you that.
Credit Counseling
Credit counseling agencies sit down with you and take a look at the big picture. You review all your outstanding debts, your income and assets, and you work together to develop a plan to help you meet your financial obligations. Credit counseling agencies typically offer a full range of services, including financial analysis, workshops and classes and informational brochures.
A customer-oriented credit counseling agency offers information about budgeting, establishing a savings account and debt management. They provide a big-picture approach to solving your financial troubles and helping you get on track. Look out for companies that push debt management programs; while they can be a helpful way to manage your finances if you really can't handle making payments, they can also be a scam. If you do choose to go with a credit counseling agency that offers debt management programs, make sure you check it out with the Better Business Bureau or the state Attorney General's office.
Compare Debt Negotiation vs. Credit Counseling
Credit counseling works with you to help you get your finances under control. Debt negotiation is an attempt to escape paying all your credit debt. When you compare debt negotiation vs. credit counseling, you see that debt negotiation may be a temporary solution, but it could result in long-term credit report issues, without ever providing you with a plan. If you must use debt negotiation tactics, you should use it in conjunction with credit counseling so you have a solid plan to get your finances under control.
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