Debt Counseling

Get the debt help you need

The goal of debt counseling is twofold: first, it helps consumers find strategies for dealing with debt problems, and second, it educates people on how to avoid getting into debt in the first place. Often, debt management counseling services will also offer to work with your creditors to create repayment plans that work for both parties.

Do I Need a Debt Counseling Service?

If you have multiple credit cards and you're getting behind in your payments, or if you find yourself having to choose between paying your creditors and meeting other financial obligations, you could benefit from debt management counseling. However, to get debt help, you'll first have to admit to yourself that you need it.

Keep in mind that you'll have to discuss your financial situation in detail with a debt counseling professional. Holding back or misrepresenting the truth will not be in your best interest, so be sure you're prepared to be honest during your appointment.

Talk is nothing without action, and a debt counseling service won't do you any good unless you're going to take the advice you're given. This requires realistic expectations; it's going to take time to clear your debts, so don't anticipate any overnight solutions.

Services Provided by Debt Counseling Programs

Debt consolidation counseling programs share many common features. Not only do they provide practical debt help, education and advice, but they also help you negotiate settlements with creditors. Typically, this involves consolidating all your outstanding debts into a single monthly payment with a fixed (and often reduced) interest rate.

Usually, this requires you to close all your active credit card accounts to eliminate any possibility of further spending. However, this will also help you make any delinquent accounts in your name current, which is what your creditors want to see.

Education is also a central part of debt counseling. You need to understand how to change your habits to avoid future debt problems, and one-on-one or group instruction may be required in order for you to take part in the program.

While some debt counseling services claim they will reduce the amount of your monthly payments by 50 percent or more, it's more common (and realistic) to expect reductions in the neighborhood of 20 percent. Debt management counseling services aren't miracle workers; they simply provide you with a practical alternative if you're overwhelmed by debt.

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