Debt Solutions: Bills.com White Paper on Debt Solutions
- Learn about Credit Counseling and Debt Settlement.
- Let your credit concerns and financial health determine what program is right for you.
- No single debt relief option is perfect for everyone.
Debt Relief Options: Compare Consumer Credit Counseling Services & Debt Settlement to Find the Best Choice for Your Needs
Ten years ago, a consumer struggling with unaffordable unsecured debt would likely have only two options — hiring a Consumer Credit Counseling Service (CCCS) or filing for bankruptcy protection. Over the past decade, however, two important changes have occurred that affect financially distressed consumers’ choices in finding debt relief.
First, a new approach to resolving consumer debt, called “debt settlement” or “debt negotiation,” has become widely available as an alternative to CCCS and bankruptcy. (The terms “debt settlement” and “debt negotiation” are used interchangeably by the industry and mean the same thing.)
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Second, a law enacted by Congress in 2005 made receiving relief from the bankruptcy courts much more difficult for many Americans. The new law placed stringent restrictions which greatly limited who qualifies for discharge of debts under Chapter 7 bankruptcy and it established onerous new filing requirements on petitioners and their attorneys.
The changes in the bankruptcy code have led consumers to turn to either CCCS or debt settlement firms seeking a solution to their debt woes. Unfortunately, due to the questionable, and sometimes fraudulent, claims some companies make online and in radio and TV commercials, it can be difficult for consumers to make an informed decision about which debt relief option they should choose. This article discusses the similarities and differences between CCCS and debt settlement. It explains the benefits, drawbacks, and overall costs of each option, with the goal of helping you better understand the available debt relief programs, so you can decide which plan is the best choice for you and your family.