Posted on August 17, 2009 at 9:29 pm Hi everyone, i want to know the difference of these two things. I'm a bit confused between "debt consolidation versus debt counseling" and i wanna be able to know the real deal before i sign up to these programs. I have a great amount of debt right now due to a medical injury on the job and I have not been able to take care of my bills.  Hope you guys can help.

Posted on August 18, 2009 at 2:08 am aren't debt consolidation and debt counseling one and the same thing?

Posted on August 18, 2009 at 4:01 am A lot of consumers are indeed confused on debt consolidation versus debt counseling, but really, they differ in more ways than one.Debt consolidation loosely refers to the process of combining several loans into one unified loan. In the process, interest rates may be lowered.Subsequently an individual may also opt to obtain either a secured or an unsecured debt consolidation loan. If they choose to get a secured loan, they have to use certain items of property as collateral, such as their home or their car. An unsecured loan, on the other hand, is simply taking a loan to pay off other loans. Debt counseling allows a consumer to discuss their current financial situation with a certified credit counselor, and the latter deems it necessary, they may recommend that the individual be enrolled in a DMP, or a debt management plan.

Posted on August 18, 2009 at 4:15 am so if you're saying that there's collateral involved then i'd rather not get that kind of loan. i don't want to run the risk of losing something valuable just to take care of everything that i need to take care of.how long does it take for an unsecured debt consolidation loan to be paid off? and how much are the interest rates?how would you know also if the credit counselor is "certified?"

Posted on August 18, 2009 at 4:27 am That's a good perspective on debt consolidation versus debt counseling Jenny Low --- most consumers unfortunately do not have that mindset. I guess it's because we all have the tendency of wanting instant gratification, not knowing that rushing thru things may not always be the best option for us, and refusing to look at the risks involved in certain decisions. A level head is always necessary in these situations, especially in terms of our personal finances.To answer your first question: it basically depends on you, and your disposable income. Keep in mind that acquiring a loan to pay off your other loans also gives you the additional responsibility to pay another interest amount on top of the current interest rate you're already paying. It basically depends on the lender, but what I can tell you is that secured debt consolidation loans have lower interest rates than the unsecured ones---after all, you have property set up as security, and as mentioned earlier, that entails a bigger risk.

Posted on August 18, 2009 at 8:12 pm In the debate between debt consolidation versus debt counseling I'd have to say that I am not completely sold out on debt consolidation. Obtaining a debt to pay off another debt doesn't really rectify the situation in terms of eliminating debt. Besides I doubt if any creditor would agree to grant a loan to a consumer who already has a lot of debt to deal with--and if they would, it would most likely be a high-interest loan, to ensure that payments would indeed be done.

Posted on August 19, 2009 at 1:50 am From what I know---certification for debt counseling is done by being a member of the National Foundation for Credit Counselors or the NFCC. This process works more effectively if you are seeking a non-profit debt counseling company. Keep in mind also that just because a company is "non-profit," it doesn't mean that you won't paying for anything at all. Some, if not most of the organizations in the industry charge certain fees.

Posted on August 19, 2009 at 2:51 am How much do the non-rpofiters charge? And hey isn't it true that credit counselors receive a cut from the creditors? That's so unfair!

Posted on August 19, 2009 at 2:59 am They typically charge $25-30, and that's an industry standard.Debt counselors do receive a "cut" from the creditors--that's between 4-10% of the total debt amount that the consumer has. That's called the concept of "free share."

Posted on August 20, 2009 at 1:52 am how does a debt consolidation appear on my credit report? i am concerned about that.