Home » Finance » Credit

Finding Out The Pros and Cons of Debt Reduction And Credit Counseling

Aug 17, 2007
In this age as we indulge in more luxuries than required we find ourselves going deeper and deeper into the debt pit. Once we begin to incur debts they just go on accumulating thereby leading to tremendous stress in our lives.
There are certain ways called as debt solutions that help us to formulate ways to pay off these debts completely rather than finding ourselves bankrupt. Two of the most widely accepted solutions nowadays are debt reduction and credit counseling programs. These two programs work towards the same goal i.e. getting rid of the debts but they have certain significant differences as well. Some of these differences are:

Shut down Your Credit Accounts
In credit counseling programs, it will be made compulsory to shut down all your credit accounts other than certain accounts like those pertaining to your business needs or those with nil or very little balances. However in debt reduction programs, it is not necessary to close all credit accounts.

Completion Period
Credit counseling services generally require much more time than debt reduction programs to pay off the debt. On an average if the former takes about five years to get rid of the debt the latter will take less than a year to do so.

Cost Saving
Debt reduction programs have an upper hand over credit counseling programs in terms of costs saved. This is because while in debt reduction programs you may have to pay a sum of about 20% - 60% of the amount owed, credit counseling programs will require you to pay the entire amount owed with a small discount in terms of interest waived.

Credit Score
In debt reduction programs, details about the difference between the settlement sum and the amount owed called the deficiency balance may be sent to the credit bureaus by the creditors. This is regarded as a degrading aspect. Thus debt reduction programs affect your credit score much more as compared to credit counseling programs.

Bargaining Power
In credit counseling program, the credit counselor formulates a plan to repay the debt and submits it to the creditors. It is then dependent on the creditors to accept or reject his plan. However, in a debt reduction program the creditors will be intimated about your inability to completely repay the debt and the creditors have no choice other than to bargain to get back as much disbursement as possible.

Thus both programs have their own pros and cons.
About the Author
Jay Moncliff is the creator of http://debtmanagementdeals.debtrelief2000.info ; a website specialized on
counseling debt , resources and articles. Further info on counseling debt , debt management service at: debt management service .
Rating:
Please Rate:
(Average: Not rated)
Views: 127
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources