In Florida, consumer debt consists mostly of credit cards and mortgages. It’s no secret that real estate and general cost of living in South Florida is extremely high. With little to no savings, most Floridians accumulate thousands of dollars in debt as they struggle to catch up with their expenses. Thanks to unexpected circumstances such as unemployment or unforeseen medical bills, many easily fall into the rabbit hole of consumer debt. In these situations, you typically have two options, debt settlement or credit counseling. You may also need the aid of a competent Florida consumer law attorney.

DEBT SETTLEMENT VS. CREDIT COUNSELING

With U.S. household debt in the thousands of dollars per household, professional services for debt relief are a dime a dozen. There are two types of debt relief services: debt settlement and credit counseling. While the two aim to help consumers manage and pay off their debt, there are key differences of which you should be aware.

Debt Settlement

Debt settlement companies are for-profit companies that you pay directly when they negotiate your debt. Companies that specialize in settling debt aim to reduce your debt by offering the option of paying the debt off with lump sum payments. These payments are less than what you owe. The debt settlement company negotiates with the creditor to reduce your payments. For the portion of your debt that is excused the debt settlement company charges a fee.

Choosing to relieve your debt via debt settlement companies sounds good at first because you are able to make smaller payments; however, it can ruin your credit score and lead to high fees and taxes. In the end, these extra expenses can potentially offset what you perceived to be saving by making reduced payments.

Credit Counseling

Credit counseling services are typically run by nonprofit organizations that seek to help you manage your money and budget your payments. They do not negotiate the total amount that you owe, but are able to reduce monthly payments by persuading the creditor to let you pay the debt off over a longer period of time. Although these are nonprofit organizations, fees are usually charged for professional debt management services such as debt management plans that help you pay your debt off.

Like anything else, debt negotiation is prone to scammers taking advantage of people in desperate situations. Beware of debt settlement companies that require up front fees to be paid after merely promising to reduce your debt. You should also refuse to work with any company that claims it can guarantee anything, whether it’s to make your debt completely disappear or to stop debt collection calls. It is also a red flag if they demand you stop communicating with creditors.

If you are a victim of any of these scams, Jibrael is here for you. Jibrael S. Hindi and his team take these cases very seriously and personally, and will fight aggressively for justice. Contact (844)-JIBRAEL today.

Free Case Evaluation

Fill out this form for a FREE, Immediate, Case Evaluation

By submitting this form I agree to the Terms of Use