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Making the right decision on debt is crucial.

Whether you choose debt settlement or counseling, knowing your options is key. Let us help you weigh the pros and cons.

Credit Counseling Services:

• Usually are non-profit organizations
• Advise you on managing your money and debts and help you budget your payments
• Reach up-front payment agreements with your creditors to ensure that they will not pursue collection efforts or charge late fees
• Usually do not negotiate any reduction in the amounts you owe.  Instead they can lower your overall monthly payment.
• Do not advise you to stop paying your debt, but may help negotiate your monthly payments.
• Usually offer free educational materials and workshops
• Although most of them are non-profit, Credit Counselors may charge fees for a debt management plan to pay off your debt and take those fees out of the payments you make to them.

Debt Settlement: 

• Debt settlement companies often charge expensive fees.
• Unless the debt settlement company settles all or most of your debts, the built up penalties and fees on the unsettled debts may wipe out any savings the debt settlement company achieves on the debts it settles.
• Using debt settlement services can have a negative impact on your credit score and your ability to get credit in the future.
•  There could be tax consequences for debt forgiveness. If a portion of your debt is forgiven by the creditor, it could be counted as taxable income on your federal income taxes. You may want to consult a tax advisor or tax attorney to learn how forgiven debt affects your federal income tax.
• Debt settlement may well leave you deeper in debt than you were when you started.  Most debt settlement companies will ask you to stop paying your debts in order to get creditors to negotiate and to collect the funds required for a settlement. This can have a negative effect on your credit score and may result in the creditor or debt collector filing a lawsuit while you are collecting settlement funds. And if you stop making payments on a credit card, late fees and interest will be added to the debt each month. If you exceed your credit limit, additional fees and charges may apply. This can cause your original debt to increase.

Want to learn more about debt solutions? Let’s chat!