Compare Debt Negotiation vs. Credit Counseling

In general, debt negotiation companies work best for individuals and small businesses that owe more than $5,000 in debt. Credit counseling companies are most effective for individuals owing many, small debts totaling less than $5,000. When you compare benefits, this contrast especially impacts the amount of money saved (lower payments, discounts, and reductions) because a small decrease in a small debt payment rarely changes overall financial health absent drastic reductions in spending habits.

Compare the ongoing benefits:

A quality debt negotiation service should include the following benefits for their clients each month:

• representation negotiating each individual debt principal, interest and late fees.
• a permanent monthly payment reduction of 67%, or more.
• provide monthly statements for all payments made and activity affecting the account.
• provide free unlimited access to articles about money management, savings plans, small consumer investments, and legal rights for disputing claims.

Typical credit counseling services offer their clients the following services on a one-time basis:

• assistance creating a household budget.
• compare income to expenses and review of actual monthly expenditures to identify wasteful spending habits.
• tips for shopping for economy priced necessities.
• lessons for balancing check books, filing taxes, and paying bills on time.
• some counseling providers also request standard interest rate reductions for credit card debts in exchange for waiving card charge privileges. These reductions may decrease payments by 10% to 20%.