Two of the most common options to help you deal with debt problems include debt negotiation and credit counseling. Today we compare debt negotiation vs credit counseling and discover why one option may be better for you than the other. Both options are designed to help you get your credit card debt under control.

First let’s take a look at debt negotiation.

Debt negotiation is the American way. You can haggle with your creditors and work out an agreement that both of you aren’t 100% satisfied with but will accept to reach a compromise on your accounts.

You use debt negotiation when you are having trouble keeping up with your minimum payments. (more…)

If you are a modern American you have probably heard about debt settlement companies before. In a new law about credit cards there is a line that requires credit card companies to provide their clients with a list of three credit counseling companies. Such counseling companies offer their services all over the US, from Hawaii to Florida, from Alaska to Arizona. Life is difficult, and sometimes we have to get acquainted closer with their modus operandi.

There exist several approaches to debt and credit counseling in the US.

• pre-bankruptcy credit counseling
• debt management plan services
• do-it-yourself approach

Let’s consider all these approaches step by step. (more…)

During these rough times in our current economy, more and more Americans are opting to file Chapter 13 bankruptcy. Many people are finding that it is the only way out. A strong desire to be free of piles of bills that there is no money to pay and harassing phone calls from lenders is often the main driving force that causes people to make this major decision.

There are similarities in credit counseling and Chapter 13 bankruptcy. The main tie between the two is that now law requires a person to enter into a credit counseling program before Chapter 13 can be filed. This is to ensure the the person filing learns from past mistakes and they are not repeated. In credit counseling the individual will learn all about proper money management, debt, and how not to get in too deep again. This is a very beneficial course to take and people who are in debt and not considering bankruptcy could also benefit from it. (more…)

Credit counseling is seen by many consumers as a positive alternative to possible bankruptcy. With today’s economy, people are losing jobs and this is greatly affecting financial status and causing great stress. Counseling provides a specific plan and time period in which a consumer will be completely out of debt, many times out of debt within 5 years. This program is very helpful if a consumer is able to make payments on time each month and if the service follows through with all promised that were made to the consumer.

Credit counseling services focus on lowering interest rates, combining payments and negotiating penalties as well as late fees. Counselors may be able to set up just one payment each month, with a minimum amount that is lower than the typical minimum that is required by credit companies. Many times, counselors are able to stop collection calls immediately and arrange credit to be given for many fees placed on past balances.

Before deciding on a credit counseling service, it is important to know the advantages and pros of the program.
1. Ratings of delinquent accounts are refigured. Many times, accounts can be negotiated and re-rated after you have been a program for a length of time. The more payments you are able to make on time, the better your ratings will become. (more…)

What can credit card debt consolidation services do for you? If you are stressing out over debt, these nonprofit organizations are great place to turn for help. They can be found in brick and mortar establishments in most communities and are readily available on the internet and give you information in a matter of minutes.

So, what can a credit counseling service do for you? The most important thing they do is consolidate all you unsecured debt into one monthly payment. Your payment will be about 2% of the total debt that you enroll into the debt management plan. It will be snowballed, which means your payment will remain the same throughout the repayment period even though your debt is decreasing.

Your interest rates will be decreased to about 10% and your fees will be eliminated. With all this combined, you will be looking at debt freedom in about five years. This is about half the time it would take you to pay off your credit cards by making minimum payments. One of the positive aspects of credit counseling is your credit will remain intact. You will still have a decent credit score when you get done with the program.

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Debt consolidation is often advisable in theory when someone is paying credit card debt, or unsecured debt. These days in this troubled economy credit cards can carry a much higher interest rate than even a loan from a bank. Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest this is definitely a better solution than debt settlement by far, because it doesn’t destroy your credit.

After deciding against debt settlement I knew debt consolidation or credit counseling was the perfect solution. I think because of the advantage that debt consolidation offers a consumer that has high interest debt balances, companies can take advantage of that benefit of refinancing to charge very high fees in the debt consolidation loan. Sometimes these fees are near the state maximum for mortgage fees. In addition, some unscrupulous companies will knowingly wait until a client has backed themselves into bad debt situation in order to make them have to refinance their home.

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In the present economic downturn, debt and insolvency seems to be escalating. Serious debt requires serious measures, with solutions sought hopefully on a long term fix rather than short term relief. Credit counseling can provide solutions to clients who have become grid locked in spiraling debt. Out of control and unable to deal with the pressures applied by creditors, many seek bankruptcy long before necessary to gain what they see as financial freedom.

Some larger amounts may be negotiated and brought within reach of the client’s pocket, whereas the client might not have considered negotiation or known how to approach the credit company with a viable proposal.

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The cost of bankruptcy will hit you in a number of different ways. There is the actual cost of filing for bankruptcy, the legal and counseling fees that you will probably have to pay and the increased cost of credit and insurance premiums over an extended period after your bankruptcy.

Cost of Bankruptcy – Filing Costs

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Knowing how to reduce credit card debt can mean the difference between being debt free or being in debt for years. Overwhelming debt is a huge problem in this country right now and it may not all be the fault of the credit card holder. If you lost your job and you had credit cards, most people would probably all do the same thing and that is–use them.

We are living in a time of great financial instability. The stock market and big businesses are all evidence of this fact. And many people are victims of these circumstances. How we deal with these circumstances can make a big difference in our financial future. If you have a lot of debt you have 3 options, if you cannot pay the debt on your own. Here is a brief overview of these options:

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