{"id":2616,"date":"2026-02-14T09:47:27","date_gmt":"2026-02-14T09:47:27","guid":{"rendered":"https:\/\/foreignnewstoday.com\/?p=2616"},"modified":"2026-02-14T09:47:27","modified_gmt":"2026-02-14T09:47:27","slug":"what-to-know-to-start-your-debt-payoff","status":"publish","type":"post","link":"https:\/\/foreignnewstoday.com\/?p=2616","title":{"rendered":"What to know to start your debt payoff"},"content":{"rendered":"<p><br \/>\n<\/p>\n<div>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->When you\u2019ve taken on more debt than you can repay and interest charges keep growing, it may be time to seek out help.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Credit counseling and debt settlement are two solutions that may offer assistance in paying off the debt you owe \u2014 whether in the form of <a data-i13n=\"cpos:1;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/how-much-credit-card-debt-is-too-much-212619916.html\" data-ylk=\"slk:maxed-out credit cards;cpos:1;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">maxed-out credit cards<\/a> or <a data-i13n=\"cpos:2;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/personal-loans\/comparison\/good-debt-vs-bad-debt-232043975.html\" data-ylk=\"slk:loan payments you can\u2019t afford;cpos:2;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">loan payments you can\u2019t afford<\/a>.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->But credit counseling and debt settlement differ in important ways. Here\u2019s what to know about the cost, process, and potential long-term effects of each so you can make the right choice for your debt payoff.<!-- HTML_TAG_END --><\/p>\n<p> <iframe loading=\"lazy\" title=\"CDS Widget\" src=\"https:\/\/templates.cds.yahoo.com\/remote\/widget?campaignId=b97be5c0-740c-40da-8c55-53d48779d932&amp;lineItemId=5a7d468b-5e8a-4146-ad4d-51bc5e7b2f62&amp;contentId=a3cf6d1f-27fd-4c6b-8aad-cf3f976803cc&amp;viewId=Oyyr7AJlWvKl3LNIbmrxAw&amp;providerId=yahoo_personal_finance_397&amp;site=finance&amp;spaceId=1183300100&amp;commerceSiteId=us-finance-pnr\" scrolling=\"no\" height=\"480\" data-testid=\"iframe-with-resizer\" class=\"yf-16wd5dt\"><\/iframe> <\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Credit counseling organizations and <a data-i13n=\"cpos:3;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/personal-loans\/article\/debt-settlement-pros-and-cons-194741837.html\" data-ylk=\"slk:debt settlement companies;cpos:3;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">debt settlement companies<\/a> have different approaches to helping you resolve your debt with lenders and creditors.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->When you work with a nonprofit credit counseling organization, you\u2019ll typically have a meeting to discuss your financial situation so the counselor can determine if a debt management plan is right for you. If you opt into a debt management plan, the counselor works with your lenders on different options for repaying your debt, which may include lower interest rates, a lower monthly payment, or a longer repayment period. Credit counseling doesn\u2019t typically reduce the amount of debt you owe, but it can make it easier to repay by making your monthly payment more affordable.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Debt settlement companies, on the other hand, may reduce your debt balances through <a data-i13n=\"cpos:4;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/can-i-negotiate-credit-card-debt-191229288.html\" data-ylk=\"slk:negotiations with your creditors;cpos:4;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">negotiations with your creditors<\/a>. Those negotiations can lead to settlements, which may include a lower repayment amount.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->It\u2019s important to know that many lenders and creditors won\u2019t work with debt settlement companies, and there\u2019s no guarantee the company can successfully lower your debt. In fact, these companies often can&#8217;t get better terms for your debt than you could by negotiating yourself, according to the Consumer Financial Protection Bureau (CFPB).<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Here are more details about how each process works:<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->The fees you\u2019ll pay for credit counseling and debt settlement will vary \u2014 but credit counseling is often much cheaper.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->For credit counseling, your first session with a counselor is often free. The organization may also offer free financial education materials and tools.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->But you should expect some fees when you enroll in a debt management plan through credit counseling. For example, you may pay a one-time fee when you start and then a flat monthly fee thereafter \u2014 though you may also qualify for fee waivers depending on your income and other factors.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->For debt settlement, you\u2019ll typically pay a percentage rather than a flat fee. The company may ask for a portion of the overall debt that the company resolves or a portion of the money that the company saves you from paying.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Watch out for any debt settlement company that asks for an up-front payment, though. According to the CFPB, each of the following things must happen before a debt settlement company asks you to pay:<!-- HTML_TAG_END --><\/p>\n<ul class=\"yf-h8k6hx\">\n<li class=\"yf-h8k6hx\">\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->The company reaches a settlement or otherwise successfully negotiates with your creditor.<!-- HTML_TAG_END --><\/p>\n<\/li>\n<li class=\"yf-h8k6hx\">\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->You agree to the terms with the creditor.<!-- HTML_TAG_END --><\/p>\n<\/li>\n<li class=\"yf-h8k6hx\">\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->You make at least one payment to your creditor or lender under the new terms negotiated by the debt settlement company.<!-- HTML_TAG_END --><\/p>\n<\/li>\n<\/ul>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->When you take on a debt management plan with a credit counseling service, you\u2019ll make a monthly payment to the credit counselor, and they\u2019ll pass on the payment that\u2019s owed to each of your creditors. This can help you consolidate your debt into a single monthly payment that\u2019s easier to track.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->With debt settlement, you may be encouraged to stop making payments to your lenders during the negotiation period. Instead, you\u2019ll typically contribute payments to a dedicated bank account. This account should be with a separate institution from the debt settlement company, and you can access it at any time.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Once the company reaches a settlement with your creditor or lender, they\u2019ll use the money in that account to pay off your debt in a lump sum. If the debt settlement company doesn\u2019t negotiate a settlement with your lender, you\u2019ll still be responsible for paying any late fees and interest accumulated throughout that period.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->If you have outstanding debt, it may already be affecting your credit. You can drive up your <a data-i13n=\"cpos:5;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/credit-card-utilization-230705957.html\" data-ylk=\"slk:credit utilization;cpos:5;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">credit utilization<\/a> when you spend close to your <a data-i13n=\"cpos:6;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/high-limit-credit-cards-164923076.html\" data-ylk=\"slk:credit limit;cpos:6;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">credit limit<\/a> or max out your credit cards, and missed payments can be reported to the credit bureaus and appear on your credit report. If your debts go to collections, they will also have a negative effect on your credit.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Whether you choose credit consolidation or debt settlement, you may also see some credit impact.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Because credit counseling often requires you to close your credit card accounts, your credit could take a temporary hit. But as you make payments toward your debt, building a positive payment history and lowering your credit utilization (since you won\u2019t be using your cards or opening more credit), you can <a data-i13n=\"cpos:7;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/build-credit-without-a-credit-card-183354538.html\" data-ylk=\"slk:build your score;cpos:7;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">build your score<\/a> back up.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->With debt settlement, the biggest risk is that the debt settlement company is unable to reach a settlement with your creditors. Throughout the negotiation process, you may be asked to stop making monthly payments. If there\u2019s no settlement later on, those <a data-i13n=\"cpos:8;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/what-happens-if-you-miss-a-credit-card-payment-133408532.html\" data-ylk=\"slk:missed payments;cpos:8;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">missed payments<\/a> can add up and result in negative information on your credit report, as well as a significant amount of late fees and penalties. Late payments and collections can remain on your credit report for seven years.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->There are scammers posing as both credit counseling organizations and debt settlement companies. Often, bad actors make false promises about your debt payoff and ask you for money up front.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->If you opt for credit counseling, make sure you choose a reputable, nonprofit organization. Two sites you can use to find credit counselors include the <a data-i13n=\"cpos:9;pos:1\" href=\"https:\/\/www.nfcc.org\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:National Foundation for Credit Counseling (NFCC);cpos:9;pos:1;elm:context_link;itc:0;sec:content-canvas\" class=\"link \">National Foundation for Credit Counseling (NFCC)<\/a> and the <a data-i13n=\"cpos:10;pos:1\" href=\"https:\/\/fcaa.org\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Financial Counseling Association of America (FCAA);cpos:10;pos:1;elm:context_link;itc:0;sec:content-canvas\" class=\"link \">Financial Counseling Association of America (FCAA)<\/a>.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Always do your research on any debt settlement company before you agree to work with them, and look out for common red flags that a company may be scamming you, such as up-front fee charges, a guarantee to settle all of your debts, promising you can avoid any debt collections or lawsuits, and more.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START --><em>Read more: <\/em><a data-i13n=\"cpos:11;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/are-credit-card-debt-relief-programs-legit-235218352.html\" data-ylk=\"slk:Are debt relief companies legit?;cpos:11;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\"><em>Are debt relief companies legit?<\/em><\/a><!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Credit counseling and debt settlement both require long-term commitment to paying off your debt. A debt management plan or debt settlement negotiation can take years, and both require you to make consistent payments toward the balances you owe.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Credit counseling is a great starting point that can help you pay off your debt at lower fees and with less potential impact on your credit score. If you don\u2019t qualify for a <a data-i13n=\"cpos:12;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/credit-cards\/article\/best-balance-transfer-credit-cards-123841213.html\" data-ylk=\"slk:balance transfer credit card;cpos:12;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">balance transfer credit card<\/a> or a <a data-i13n=\"cpos:13;pos:1\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/personal-loans\/article\/how-does-debt-consolidation-work-225936256.html\" data-ylk=\"slk:debt consolidation loan;cpos:13;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">debt consolidation loan<\/a>, this is a good option to get help paying down your debt. One of the biggest benefits of a debt management plan from a credit counseling service is getting more manageable monthly payments that can help you chip away at your total debt over time.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->When you opt for credit counseling, make sure you\u2019re okay with closing your credit card accounts. You may also be unable to open new accounts for a set period under a debt management plan.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Debt settlement can be much riskier for your credit score and your wallet. If your creditors refuse to negotiate a settlement, you could be left with a long-term, negative credit score impact \u2014 and even more debt (plus fees and penalties) than you started with.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->If you choose to work with a debt settlement company, make sure you\u2019re informed about exactly how much you\u2019ll owe and when. Be prepared for the chance that you won\u2019t be able to settle all of your debt, even if the company can successfully settle a portion.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->An alternative to working with a third-party debt settlement company \u2014 and one you may want to consider doing first \u2014 is reaching out to your creditors yourself. You may be able to negotiate a payment plan, waived fees, or even reduced payments without having to pay a debt settlement company\u2019s fees.<!-- HTML_TAG_END --><\/p>\n<\/p><\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/finance.yahoo.com\/personal-finance\/personal-loans\/article\/credit-counseling-vs-debt-settlement-151706017.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you\u2019ve taken on more debt than you can repay and interest charges keep growing, it may be time to seek out help. Credit counseling and&hellip;<\/p>\n","protected":false},"author":1,"featured_media":2617,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-2616","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-finance"],"_links":{"self":[{"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=\/wp\/v2\/posts\/2616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2616"}],"version-history":[{"count":0,"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=\/wp\/v2\/posts\/2616\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=\/wp\/v2\/media\/2617"}],"wp:attachment":[{"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/foreignnewstoday.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}