When people in Oregon are struggling with credit card debt, they may consider options such as credit counseling or debt settlement. Both of these may offer them assistance in regaining control of their finances. However, there are a number of key differences between the two options, which may make one better suited for a situation than the other.

Credit counseling is a financial service that is aimed at educating consumers about how to manage their money and their debts. According to the Federal Trade Commission, credit counseling organizations offer educational workshops and materials, as well as advice on how to create budgets. Debt settlement, on the other hand, is a financial service that helps people arrange to pay off their creditors or debt collectors. Generally, credit counseling organizations are non-profit groups that offer free assistance. Debt settlement companies and law firms are usually for-profit. They typically charge a fee for their services.

Often, credit counseling organizations reach agreements with people’s creditors up front to stop their collection efforts. They may negotiate to lower the monthly payments that people are making towards their debts, however, they do not typically reduce the amounts that people owe. The Consumer Financial Protection Bureau points out that debt settlement groups may offer deals for people to pay off their debts for less than they owe. In the majority of cases, however, they do not have any type of up front agreement with people’s creditors.

When participating in credit counseling, people are often advised to continue making their monthly payments. It is common for debt settlement companies to require people to stop paying their creditors in order for their programs to succeed.