How A Credit counseling Service Differs From A Debt Settlement Program?There are many ways a person can dispose of liabilities. You can choose to go for a credit analysis service or milk a debt settlement program. These two options may seem the same but it is not. Basically, a credit analysis service gives the much needed financial steering for the person in debt. It also hopes to reduce debt by giving the indebted person many options to do so. In contrast, a debt settlement program works for a reduced-balanced settlement. This just means that you can eliminate your debt by paying an amount lower than your original balance. For instance, you've a debt adding up to $5000 to a certain bank. With debt settlement, it is pretty much possible for you to settle your $5000 debt by paying $3500 in full.In a this type of program, all you have to do is to go to a debt settlement company and ask about their services. Sometimes, the process is such that you pay your monthly dues to the debt settlement company rather than immediately paying it to your bank. The debt settlement company then keeps your payment as a settlement fund. Upon reaching a considerable sum of money, they'll then conduct talks with your original banks so you can pay off your debt in a lesser amount.If you come to consider it, this is a good way to get rid of your dues. But you have to think twice about this option because there are negative aspects about it.The first being that going into a this kind of program is that it can severely affect your credit score. Most creditors aren't ok with standard payments as a way of paying your dues. And naturally, you will not be at ease if you are asked to pay your dues in full . So, you resort to waiting for your settlement fund to grow and stop paying without delay to your lenders. But small did you know that even if you go for a debt settlement program, your account will still continue to be overdue. And an overdue account equals a negative credit rating. Since your account is considered overdue, you can expect to get harassing collection calls and letters in spite of going for a debt settlement program. Not only this, you can even be sued by your bank if you continue to miss your payments. Even if you save a lot by paying less than what you owe, the balance that your bank has relieved you of can be taxed by the IRS. Thus, it is necessary for you to check with your tax adviser for the right information regarding this situation . Nonetheless, debt settlement is satisfactory in situations when a person's credit score has already been damaged. But if the credit report can still be salvaged from a negative rating, debt settlement should be steered clear of. On the other hand, a debt management program helps a person lose debts by negotiating interest rates and fees. It also extends the payment details of your balance. Similar to a debt settlement program, you also have to make payments to the managing company but these payments will immediately be distributed to your bank within a week.These are the areas where a debt settlement program and a counseling service differ. If you feel you need to avail of any of these options, be sure to ask your financial adviser before you make a call.