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Debt Settlement Produces More Welfare than Credit Counseling

“Debt Settlement Produces More Welfare than Credit Counseling” – Franklin Debt Relief to FTCA new report submitted by Franklin Debt Relief’s CEO, Robert Zangrilli, to the FTC shows that debt settlement benefits consumers more than credit counseling, and in fact, consumers who use credit counseling lose more money in non-refundable payments than they save based on industry statistics. This finding comes on the heels of the FTC’s proposed advance fee ban for debt settlement companies, which according to the report, titled “Common Sense”, would cause significant collateral damage by forcing more consumers to enroll in debt management plans (DMPs).

The report points out that since non-profit credit counseling is subsidized by credit card companies it is naïve to assume that these agencies serve the interests of consumers, and it goes on to support this thesis with statistics such as the fact that 35% of consumers who contact consumer credit counselors are enrolled in debt management plans (DMPs) despite the fact that more than 75% of these consumers will never complete their programs. According to Zangrilli, the average consumer who uses a DMP loses approximately $5,000 in non-refundable payments to credit card companies when they should have been advised to seek out the services of a debt settlement company or bankruptcy attorney immediately. He goes on to suggest that this should be expected since these agencies are funded by banks and it makes sense that they would serve their interests primarily, even if it is at the expense of consumers.

In the midst of the worst recession since the Great Depression and with the FTC contemplating rule-making that will potentially eliminate the debt settlement industry as we know it, it is dangerous to push consumers into the arms of credit counselors. Although it is clear that the debt settlement industry needs to be cleaned up, even in its current unregulated form it is a better alternative to credit counseling for most consumers.

To read the report check out: To see the press release for this report:


Kairon - Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. Debt settlement is often confused with debt consolidation. In debt consolidation, the consumer makes monthly payments to the debt consolidator, who takes a small fee and passes the rest on to the creditors; this way, creditors continue to receive payments each month.
Debt Free Daniel (Guest) - This is such a great help, counseling focused particularly on advices and not solutions on how to be debt free. Settlement sounds more a positive idea to become free from debt.
Andrew (Guest) - This really provides some helpful information on debt settlement...something I didn't know much about it previously but is definitely an important area to understand.  Thanks!
teal (Guest) - It's impossible to definitively answer the credit counseling verses debt settlement  debate because it depends on a number of variables that differ from person to person. The purpose of this article is break down which factors you should consider before choosing the appropriate option.
Gabriel Paul (Guest) - It is really a commendable and noteworthy effort. I was looking for such a Debt Settlement information for a long time. The discussion has helped me a lot in my research.