Myth no 1 – debt management and credit counseling are one and the same: this can never be further from truth. One is advice to handle debt and the other is a tool used to effectively use your payments for fastest repayment possible. Hence, these terms though they sound so similar are not interchangeable. While debt management is action, credit counseling is generally speaking, theory.

Myth no 2 – you can half your debts by using a credit counselor: Many times it is like magic – what you see is not actually what you get. You see a reduction in payment of the bills – that does not mean under any circumstances that the payment due has been reduced. What actually happens is that the credit counselor re-negotiate on delayed payments and get the bills back to the rates that you had when the payment were on time. This is done not by waiving away the outstanding, but by pushing back into the major mass of debt outstanding the excess from the monthly bills – so you can at least the monthly bills.

Myth no 3 – there are organization which offer lower rates – there is no such thing as lower rates. This is the most tragic myth and one that is almost impossible to wipe out from people's minds. The agencies always advertise their lowest rates possible – but you should know that those rates are only viable for excellent credit rating. When any agency dips below the main rates average – do not take is as the best rate available – but as the fraud rate available. The ad is almost always to attract attention and clients – there will be sufficient hidden costs to make up for the advertised “low rate”

Myth no 4 – get hold of a debt management program/ agency which can negotiate lower DMPs – beware that when you enter into this agreement you are totally destroying your credit rating. It so happens that the DMP can indeed negotiate lower rates – but how? They hold onto the cash till the bank is ready to wipe off your credit for 5% to 100% - when you accept this – you gain the cash – but you greatly loose on your credit rating

Myth no 5 – Debt settlement is the best way to get out of debt – this trick will actually mark your credit for good; and secondly this is not ethical in the real sense of the word. Beware, when you think of this – many times this can backfire pretty badly on you. Also you are liable to pay tax on the money your debtors agreed to “give” you.