Five Differences Between Credit Counseling and Debt Reduction Settlements

We are frequently asked the difference between the Aegis form of debt consolidation and that performed by Credit Counseling Agencies across the United States. There are quite a few differences, and the following will give you an excellent grasp of some of them. Of course, we always recommend you contact us for a free consultation, but this information may be helpful when deciding how you would like to beat your debt.

Difference #1
Credit Counseling Programs Require Closing Of All Credit Accounts

With credit counseling-type programs, all major creditors require that you close all of your credit accounts. There are exceptions, however. These include:

• Accounts required for business purposes
• Accounts with co-signers that are not applying for Credit Counseling
• Accounts with minimal balances

Because creditors are given full access to your report, they reserve the right to cancel their hardship program with you if they discover your accounts are not closed.

With Debt Reduction Settlements, however, there are no such requirements. Usually, we recommend our clients close some accounts, merely to "beat the temptation" that credit cards can provide, but it is not required.

Difference #2
Four To Six Years Vs. Six To 24 Months

When enrolled in a Credit Counseling-type program, it typically takes 4 to 6 years for the average client to liquidate their debt.

With an Aegis Debt Reduction Settlement, clients can liquidate the same amount of debt in only 6 to 24 months.

Difference #3
No Savings Vs. Savings

When enrolled in a Credit Counseling Program, all debt, plus accrued interest must be paid back.

With a Debt Reduction Settlement, the amount paid back depends on the creditors and skill of the debt negotiator. Aegis settlements typically range from 20% to 60% of the current debt, with the typical overall savings being 50%.

Difference #4
Your Credit Status

With Credit Counseling programs, most creditors will re-age the account once you have made three consecutive payments through the agency. In most cases, creditors report accounts as being paid by debt management or credit counseling.

With a Debt Reduction Settlement, current status does not changed. If you are not current on your accounts, the report will reflect this. If you are current, your report will state current.

With our Debt Reduction Settlements, however, the settlement agreement with the creditor is worded so that the account is reported as "Settled-in-Full," or similar terms.

Difference #5
Bargaining Power

When enrolled in a Credit Counseling Program, creditors are sent a payment proposal, which may or may not be accepted. The proposal often requests that all future inquiries be directed to the agency. While most creditors comply with this request, some creditors continue to contact the debtor, especially during the initial stages.

When seeking a Debt Reduction Settlement, all creditors are contacted immediately to inform them of the debtor's hardship and desire to resolve their debt through a negotiated debt settlement.

Meanwhile, we issue all creditors a cease and desist order instructing all future contacts to be made directly to us - not to you. That way, creditors will stop calling you, and you can go on with your life.

Please contact us here for a free debt consultation.