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How Do Consumer Credit Debt Counseling Companies Work With My Creditors?

The two primary forms of unsecured credit card debt relief are debt settlement and debt management. The latter is a service offered by consumer credit debt counseling companies who work very closely with the credit card companies to develop programs that allow you to repay what you owe over time.

These programs include creating a new financial budget for you that consolidates your credit card bills and helps reduce your totals payments through an interest rate and fee reduction.

Consumer credit card debt counselors already know the amount of the rate reduction they can offer you after they assess your financial situation. They do not have to negotiate it with your creditors one by one. They have a formula they use that has been predetermined by them in conjunction with all the credit card companies as they work closely together. In fact, they make their money in two ways:

1. From a set up and monthly management fee they will collect from you

2. From payments the credit card companies make to them for helping you manage your finances.

Why do the credit card companies pay them? Because they want to get paid back what you owe them and without debt management companies many consumers would end up with a debt settlement company that will reduce the balance owed. The result, they would take a loss vs. just less interest income.

So consumer credit debt counseling companies work in tandem with the credit card companies and are actually paid by them to help you get in front of your debt problem before it gets out of your control. They make more money that way.