Credit counseling programs have recently become more popular as an option for consumer debt relief. The programs are typically intended for individuals and small businesses with several high interest credit card balances. These programs allow you to combine all your debts for one monthly payments and get a lower interest rate. Sounds good right? Well, there are also some cons to consider as well.
Credit counseling programs are great for consumers and small businesses with high interest credit debt. By combining all the debts and paying them back at one monthly payment with a lower interest rate. Lowering the interest rate just a point or two can save you thousands of dollars throughout the payback period so consumers that complete these programs are definitely better off because of it. The challenge to complete the program.
These programs are notoriously strict for missed payments. Typically if you miss or are late on just a few payments they will kick you out of the program. This will leave you in worse financial condition that before. So before entering into such a program it is very important that you can comfortably pay it each month.
If you are struggling to pay your minimum monthly payments and are experiencing a financial hardship. Debt settlement programs allow consumers to eliminate around 40-60% of their unsecured debt while avoiding many of the consequences of filing bankruptcy. If you have at least $ 10,000 in unsecured debt and are struggling with credit card bills than debt settlement can be financially advantageous.
When choosing between credit counseling and debt settlement the number one thing to look at is your ability to pay your credit card bills each month. If you can comfortably meet your payments each month and don't foresee any issues in the future than a credit counseling program is probably better. If however you are struggling to pay your bills or you expect in the near future to be struggling, then a debt settlement is probably the better option.