Debt Settlement and Consumer Credit Counseling Are Not for the Same People

Debt Settlement is an option for those who have few options for debt relief. Consumer Credit Counseling is an option for those with the luxury of having options.

Consumer Credit Counseling (CCC) is primarily for those seeking financial convenience. CCC reduces interest rates on credit cards whose payments are relatively current. It does not save a client any money whatsoever on principal. The terms of CCC are set up by the creditors themselves. As such the new pay schedule set up under CCC most often does not drop one's monthly payments and can even raise them. With CCC monthly savings are not that significant and so people with real hardship cannot typically afford to access the advantages of this program. The most significant benefit of CCC is to reduce the total time required to payoff one's debts. Consumer credit counseling is thus simply a convenient service for becoming debt free more rapidly. This convenience is only accessible to those who have debts that qualify and can afford to pay right around what they are paying now each month.

Debt settlement is primarily an alternative to bankruptcy for those with real hardship. This service reduces the total principal to be paid through settling debts "in full". Debt settlement is structured by a third party company rather and takes into account the client's ability to pay and not just the desires of the creditors. Creditors enrolled in the program are willing to accept settlement terms to avoid getting zero should the client file bankruptcy. Debt settlement benefits the client by both alleviating their monthly overhead (and therefore alleviating their hardship) and by also dramatically reducing the total time required to get out of debt. It is therefore best described as an alternative for relief of real financial hardship. This option should only be used by those who have ruled out other options and would like an alternative to bankruptcy and who have a real hardship from which they need relief.

Debt settlement and consumer credit counseling may "feel" the same but they are very different in terms of who should enroll in these programs. Consumer Credit Counseling is an option for those whose situation is such that they afford to have options. CCC prospects do not typcially actually have to choose to do anything at all. Often those who are good consumer, credit counseling can often just as easily choose other options including paying their debts as they are at present. Debt settlement is for those who have little other choice other than continuing to struggle to survive or to file bankruptcy. Other options simply don't suit their situations as they are in real hardship which eliminates almost all alternatives. The difference therefore between these two services lies not in the "what" but in the "who". People with financial issues can typically benefit only from one of these services while the other is likely to be not beneficial or even harmful.