There are many services in Ohio that can be used to deal with debt. Two of the most prominent of these types of services are credit counseling companies and debt settlement companies. Although both of these services are intended to accomplish the goal of debt relief, they work toward this goal in different ways. Before making a decision about debt management, it is important to know the facts about these services.
Credit counseling companies are designed to educate people about money management and debt repayment. Typically, a credit counseling company will help a client create a plan to repay creditors. They may also negotiate with creditors to reduce interest rates or lower monthly payments by extending the repayment timeline. Although many of these organizations are non-profit, some of them charge fees for their services.
Debt settlement companies work directly with creditors and clients to work out a deal to pay off debts for less than the original amount owed. For example, they may negotiate with creditors to reduce the overall balance of an outstanding debt by getting the client to agree to pay off the debt in a lump sum. However, debt settlement companies will typically charge the client fees in exchange for lowering the total amount of the debt repayment.
Many people may not realize that filing for bankruptcy is another way to deal with large amounts of debt. In reality, personal bankruptcy is a useful tool that can be used to discharge debts, stop wage garnishment and prevent debt collection efforts. Managing debt may seem like an impossible challenge, but it doesn't have to be. An attorney may be able to explain the bankruptcy or debt relief process so that a client can decide which option is right for them.
Source: Consumer Financial Protection Bureau, "What's the difference between a credit counselor and a debt settlement company?", January 03, 2015