Debt Settlement vs. Debt Negotiation
Fix Yor Credit April 26th. 2010, 9:42amWhat’s the Difference between Debt Settlement and Debt Negotiation?
Last updated April 26, 2010
Many people are confused by the range of programs which proclaim that you can get out of debt:
- debt settlement
- debt negotiation
- consumer credit counseling
- bill consolidation
In most people’s monds, these two types of companies are the same. In my opinion, they are not. We’re going to show you the difference between debt negotiation comapnies and how their operations are different from debt settlement companies. By the way, in case you’re thinking we are advocating debt settlement firms, this is not the case. We are only explaining the difference.
What’s Wrong With Debt Negotiation
Debt negotiation companies set up a “trust” for you – though they are not a licensed bank entity under the Federal Reserve, but hey, neither is Paypal. They also collect a monthly fee to maintain the account. On top of these fees, they ask you to put away a certain amount of money towards your debt. The idea is to create a savings account until the debt is paid off. Unlike consumer credit counseling services, they do not pay your creditors each month, they put money into your “trust”. You creditors are not told of your “arrangements” with the debt negotiation company.
