Credit Counseling

A Consumer Credit Counseling Service (CCCS) is one of several options available to consumers struggling with credit card debt. CCCS companies claim they can substantially lower your credit card interest rates, thereby allowing you to pay off debts faster and save a substantial amount of money. Unlike debt settlement, which actually negotiates a reduction in the principal of your debt, CCCS simply makes monthly payments until the full balance is paid.

One of the major problems with CCCS firms is that they receive much of their funding from the credit card banks, creating a serious conflict of interest. While the debtor believes that the CCCS firm is working for him or her, the firm is actually being paid by the creditors. Historically, creditors returned 15% of all payments received to the CCCS company as a “contribution” for its service. This arrangement is eerily reminiscent of the commissions paid to collection agencies working directly for the credit card banks to collect on delinquent accounts. However, it should be noted that the amounts of creditor payments to CCCS firms have been steadily decreasing over the past decade. A 2003 study by the National Consumer Law Center states that the average payment is now only 8%. As a result, many CCCS firms have increased the fees charged to their customers. Many large banks have also been increasing the interest rates charged on accounts in enrolled CCCS programs. The combination of these factors means that CCCS clients are now paying more in fees for a service that is saving them less money.

In general, CCCS may help you obtain lower interest rate, but the interest is not usually lowered enough to significantly reduce your monthly payments. If you cannot afford the required payments, or need to be out of debt faster than credit counseling can offer, debt settlement may be the best choice for you. Debt settlement programs usually last around three years, and the payments required are generally lower than those required in CCCS programs.

The Debt Resolution Partners debt relief program offers many benefits that CCCS firms do not. Typically, clients enrolling in the Debt Resolution Partners program will have a lower monthly payment, will settle their debt for much less, and will be completely debt free faster! Please call us to speak with one of our knowledgeable and friendly debt consultants today!