What's better between a consumer credit counseling agency vs. a debt management program? For those looking for outside help in reducing credit card debt there are two primary options. One is to use a consumer credit counseling agency. The other is to use a debt program with a debt management company. Both have their pros and cons.
When credit counseling is offered, the result is usually the same outstanding balances but with improved terms. A counseling service attempts to work with you and your creditors to negotiate more favorable terms so that debt will be paid off faster or for a reduced payment, both due to lower interest rates or improved terms. Using credit counseling may have a negative impact on your credit score but if you must use an outside firm this is an option worth checking into. There are reputable counseling agencies available if you shop around.
A debt management program is something different. Here, a company will typically pay off your debts and negotiate with your creditors to greatly reduce or even cut the principal balances owed. This will also impact your credit and leaves you at risk of many collection calls while terms are being worked out. Payments are normally made directly to the debt management company to pay them back. There are many questionable companies in this business so do your homework before jumping in.
The Best Option
For many, getting out of debt is manageable with a few changes that will increase income or reduce expenses. For others, help from an outside agency becomes the only choice left. If that is the case for you, understand the difference between these two options, check them out carefully, and pick the option that is best for you.
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