Most consumers that have searched the internet for help with debt management have encountered information about credit counseling programs at some point or another. But what most consumers don’t know is that most of these companies are run by the same people who put them in the position to search for debt relief options – the creditors.
The reason why creditors own the majority of credit counseling companies is because the same people that stop paying them join these programs and, as a result, still end up paying back a large portion of the debt. This way, creditors still get back most of the money they were owed by acting as a negotiator between the debtors and themselves.
What’s the problem with this if it’s still helping people get out of debt?
* Creditors receive all the fees for helping you negotiate with them.
* Although they lower your interest rates, they withhold dropping them down as low as possible to maximize their earnings.
* They try to work out a payment plan that’s as beneficial to them as possible.
* They often make the payment date according to their schedule, not yours.
This is why it’s important to do a background check of any company you’re looking to receive service from and make sure everything checks out and they are who you think they are.
Although credit counseling may seem to be beneficial, there are better debt relief programs available. In most cases, debt consolidation is the better alternative to credit counseling. Consolidation companies are not owned by creditors and can drop your interest rate to the minimum rate available giving you a lower monthly payment and potentially a shorter payment plan.
Out of the many debt relief options available today, debt settlement is the better debt relief choice. This is because debt settlement companies negotiate with creditors which results in the complete elimination of interest rates as well as an overall reduction in your total debt amount. The standard debt settlement company offers to negotiate your debt down to 55% (almost half). Also, debt settlement companies do not appear on your credit report like credit counseling and debt consolidation companies do (they show up as: “Currently enrolled in a debt management program.”).
Regardless of the debt relief option you choose, always remember to make sure the company is legitimate and has a strong rating with the Better Business Bureau.