Debt Consolidation is not Debt Settlement

Debt Consolidation, should not be confused with other programs that sound similar, but which are very different. Our Debt Management Program is an alternative solution to debt settlement (also known as credit card debt settlement and debt reduction settlement).

Debt Counseling Corporation’s Debt Management Program (DMP) offers you a personalized way to merge your overwhelming debt and arranges for repayment.  Eliminate your debt now while learning  how to avoid excessive spending  in the future

Debt Settlement: A definition

Debt settlement (card credit debt settlement and/or debt reduction settlement), is a process by which you pay a reduced amount of money for the total debt owed. For example, a debt settlement company may negotiate that you pay 70 cents on the dollar, so if your total debt owed was $1000, you would pay $700.

Disadvantages to debt settlement, credit card debt settlement and debt reduction settlement.

	Most debt settlement companies require that you pay your debt off in one lump sum. If you are struggling to make ends meet, using the example above, paying $700 at one time may not be possible or beneficial to you
	Your debt will not appear as “paid in full” on your credit report. Instead, it will show that you settled your debt and your credit score will suffer.
	You may owe income tax on the amount of debt that has been forgiven. Any amount forgiven over $600 is considered income to the consumer. The creditor will send you and the IRS a Form 1099-C at the end of the tax year.
	Debt settlement companies do not offer consumers free education to help them understand how to handle their finances and avoid getting into debt again.

Debt Consolidation Is Not a LoanOur Debt Consolidation Debt Management Program does not lend you any money. Therefore we are not just one more creditor on your list you owe money to, so that over time you can restore your credit history and take control of your finances once again.

Instead, we help you pay off your debt yourself, with very low interest rates. This helps you take control of your finances and restore your credit history over time. Also, when you are given a loan, you are not provided with free, ongoing education as you are through Debt Counseling Corporation.

Debt consolidation is not “credit repair”

“Credit Repair” companies claim that they can remove damaging information from your credit report. They usually ask for a fee up front, and then claim to work to improve your credit.  Unlike our debt consolidation, Debt Management Program (DMP), credit repair companies do not address the amount of your debt nor do they provide options on how to reduce that debt. “Credit repair” companies do not typically offer the consumer any educational information or counseling.

According to the Federal Trade Commission (FTC), the fact is that nobody can legally remove negative truthful information from your credit report. Please refer to the FTC webpage on this issue at www.ftc.gov/bcp/conline/pubs/credit/repair.htm  for further information.

Debt consolidation is not “bankruptcy.”/

There are some key differences between participating in a debt consolidation Debt Management Program and filing for Personal Bankruptcy.  Below is a list of the most significant ones.

Remember...Bankruptcy has a significant negative impact on your FICO score and remains on your credit history for 10 years.

See http://www.myfico.com/CreditEducation/WhatsNotinYourScore.aspx