Credit counseling vs. debt settlement.

• Position: Economics - Association of Independent Consumer Credit Counseling Agencies

In our troubled economy, more and more people are having trouble paying their debt. When seeking help, many individuals are confused about their options. The Association of Independent Consumer Credit Counseling Agencies (AICCCA), Fairfax, Va., encourages consumers to learn the differences between services offered through credit counseling and debt settlement.

"The major difference when repaying debt through credit counseling with a debt management plan is the consumer will repay the entire amount of debt owed, whereas with a debt settlement plan the consumer will repay only a portion of the total debt owed," explains Dave Jones, president of AICCCA. "Many other differences exist that consumers should study before making a decision on how they will solve their debt problems."

Concerning credit counseling, member offices of AICCCA and most other agencies are nonprofit organizations. All provide a free initial counseling session where a certified counselor will discuss a thorough review of your financial situation and make recommendations based on your goals for seeking assistance.

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These might include budgeting advice where consumers follow a new budget and work out their problem debt themselves; a debt management plan where consumers repay their debt through the DMP; or a referral for assistance outside of what is offered in credit counseling, such as bankruptcy or family counseling.

Fees are regulated by state law and typically are less than $75 to enroll and less than $50 per month. Most creditors will re-age past due accounts after 90 days of on-time payments through a DMP, improving credit by...