The two different types of debt management you refer to in your question are Debt Settlement and Consumer Credit Counseling Service (CCCS).
Just so that you can compare your options, while CCCS programs disperse a portion of your payment to each of your creditors each month, debt settlement firms encourage you to save a certain amount monthly, using the funds saved to negotiate lump sum settlements with your creditors.
To my understanding, CreditGuard of America is a consumer credit counseling agency, which makes monthly payments to your creditors. If you have any doubt as to whether or not the debt management firm you hired is providing the type of service you want, I encourage you to call the firm to discuss its services. Also, most firms have very detailed contracts. You should review your contract and make sure that it is a program that meets your needs.
I will give you some detail on all of your options below:
Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts, but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy, because you used a third party to re-organize your debts.
Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money.
Debt Consolidation Loan
Many people think first of a debt consolidation loan when seeking online debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a debt consolidation loan, you exchange one loan for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt. It is important to be aware that shifting unsecured debt to secured debt can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure! In the case of a debt consolidation loan, most mortgages are 30 year loan, which means that the total cost and the time to debt freedom could be very high? but the monthly payment will be lower than other options and there is no credit rating impact.
Net-net: while there are many forms of online debt consolidation, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation. However, each consumer is different, so find the online debt consolidation option that fits for you.
Bills.com makes it easy for you to apply for the best solution that meets your needs, by following this link: Debt Relief Savings Quote
I hope that this helped you to Find, Learn, and Save!