Many Consumers Better Served by Debt Settlement Companies

Madison, Wis. — Consumers seeking to manage their debt have higher success rates when using credible debt settlement companies rather than credit counseling services, The Association of Settlement Companies (TASC) revealed today in its analysis of both industries.

TASC, the non-profit watchdog organization for self-regulating the debt-settlement industry, gathered the information from various sources, including the Consumer Federation of America and National Consumer Law Center, the Executive Office for the U.S. Trustees and testimony by credit counseling companies.

"The main difference is that debt settlement companies work on behalf of consumers to reduce the outstanding balance of debt," Chris Kesterson, President of TASC, said. "In contrast, credit counseling companies work for credit cards and banks and usually only obtain concessions on interest rates. Thus, many consumers cannot afford credit counseling payment plans."

Other differences between the two services:

• Debt settlement companies do not receive any fees, contributions or other forms of compensation from any entities other than the debtor client. Meanwhile, credit counseling companies get money each month from their customers, plus they receive "contributions" from credit card companies and "fair shares" from banks.

• Debt settlement programs are typically 36 months or fewer. Credit counseling programs are usually 60 months or more.

• For consumers that complete programs, the total cost of a debt settlement program is usually about half the cost of a debt management program offered by a credit counseling company.

• Debt settlement programs achieve individualized and customized results depending on a consumer’s circumstances and needs. Credit counseling payment plans are fixed payments over a length of time.

With both shorter program durations and lower budgeted monthly payments, debt settlement programs frequently see higher success rates and fewer dropout rates.

"It should be noted that since credit counseling does not seek reductions in the principal amount owed while only getting some reduction in the fees and interest, a consumer using credit counseling can make payments for some time and never get ahead," Kesterson said. "In other words, credit counseling often does no better than a consumer simply making minimum payments, which often cannot be afforded anyways."

About The Association of Settlement Companies
The Association of Settlement Companies (TASC) promotes fair business practices, consumer protection and industry standards for the debt settlement industry. TASC, founded in 2005, serves to protect consumers through an organization seal that represents best practices and standards of reputable companies. The organization also protects its member companies through lobbying efforts at the state and national levels, as well as awareness initiatives to educate consumers on debt settlement as a financial solution. All TASC member companies pledge compliance to strict association bylaws governing business practices and ethics. For more information, visit tascsite.org (http://www.tascsite.org).