If you have obligations and need to dump it, you are faced with the choice of going for a credit counseling service or joining a debt settlement program. Before you are taking both options as the same, you've got to know that though they help you to get rid of your debt, they're very different. A credit counseling service gives you the right direction and options to eliminate your dues. The major difference of debt settlement versus a credit counseling service is that it allows you to settle your due balance for a lesser amount. Let's say you owe your ATM card company $3000. You can settle this amount if you pay your ATM card company $2000 in full . Debt settlement is easy to avail of. You have to go to a debt settlement company and ask for their aid. A debt settlement program works by requiring you to make payments to the debt settlement company. The debt settlement company will then pool your money into a settlement fund. Once your settlement fund reaches a large amount of cash, the debt settlement company barters for a reduced balance payment from your creditors. Debt settlement is something each debtor wishes to avail of because it appears too good to be true. However, you must know some things about the program before you join one. It is a fact that debt settlement can influence your credit standing in a negative way. As much as creditors need to accept monthly payments from you, they do not give this option often . They will typically require you to pay your dues in full which naturally, you are unable to afford to do. Therefore, you are left with no choice except to stop paying immediately to your lenders and wait for your settlement fund to reach a certain quantity which you may use to pay your dues. However, if you do this, your account will still be overdue. And take note, your payment history makes 35% of your credit report so you would like to keep it current as much as humanly possible. With your account overdue, expect to get badgering collection calls and demand letters from your lender as their collection practices will not stop even if you enter a debt settlement program. Much worse, you can even get sued for missing your payments. And even if you made a bargain by paying less than what you owe, the difference between your balance and the payment made is taxable by the IRS. Do not forget to talk to your tax counsellor about this. Yet notwithstanding all this, debt settlement can still be a good option in certain situations. For instance, debt settlement can be an option for people whose credit standing has been severely damaged already. If your credit standing can still be rescued, look for other options to dump your debts. A credit support service helps you eliminate your dues by lowering rates and dumping overlimit fees. It also barters for the extension of your repayment terms. And though you continue to make standard payments to the credit counseling service, these payments are right away paid to your creditors to save your credit standing. Whether you go for a credit support service or a debt settlement program, the choice remains on your current fiscal situation. Don't make hasty decisions. Get into a consultation with your finance counsellor so you avoid ending up in a deeper financial dump.