Transcript: Credit Counseling or Debt Settlement?
By Bankrate.com

Anchor intro: You've seen the ads: credit counseling companies promising to lower or wipe out your debt. Bankrate.com takes an inside look at exactly how these companies can help.

Voice-over 1: If you're in debt trouble, you've got plenty of company.

Voice-over 2: And you've got lots of people willing to help you too. For example, credit counselors.

SOT: "A credit counselor will work with the client and reduce the debt over time, and you will pay...in many cases...a lower interest rate or no interest rate at all."

Voice-over 3: So a credit counselor gets between you and a creditor, tries to negotiate better terms and sets up a plan to repay all your debts over time, generally three or four years. And the cost?

SOT: "Generally between $10 and $50 a month."

Voice-over 4: But credit counseling isn't the only game in town. Debt settlement is also popular: That's offering to pay a one-time lump sum of less than you owe and wiping out the debt in one fell swoop.

SOT: "Debt Settlement...the argument for that is you can negotiate the debt, hopefully at a lower, reduced amount...pay it off once, and be finished with that creditor and never have to worry about it again."

Voice-over 5: So with debt settlement, you or someone you hire is negotiating with the creditor to pay a chunk of what you owe and have the rest of the debt forgiven. Costs for this service vary widely, from a couple of hundred up.

Standup: Either of these methods might work depending on your circumstances. But if you're hiring help, be extremely careful: there are bad apples in both camps, and they're not always easy to spot. For Bankrate.com, I'm Kristin Arnold.