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How Does Credit Counseling Work?

what is credit counseling

How does credit counseling work? If you struggle with debt, you may have asked this question. There’s a lot of confusing information out there about how to handle your debt and what options are available to help you break free. Credit counseling is one of many options available, but how do you know whether or not it will be useful for your particular situation?

I’ve put together a short guide to help you better understand the process and determine if it’s the right choice for you. First you want to understand exactly what credit counseling is and what it involves. Once you have a better understanding, it will be much easier for you to make a choice.

What is credit counseling?

In a nutshell, credit counseling is an educational process that allows a consumer struggling with debt to learn how to eliminate it and how to prevent the debt cycle from repeating. You can engage in the process several different ways, but typically it is done either by phone, in person, or online. Once you determine the best credit counseling program for you, it’s important to take advantage of the educational support to learn how to handle your debt. For a better understanding of what happens when you speak to a credit counselor and what information you will need to provide, we’ve put together a handy guide to help you know what to expect on your first call.

What options will credit counseling offer me?

When you speak to your credit counselor for a free consultation, they will be determining several important pieces of information to make the right recommendation for your debt situation. They will work with you to create a budget that takes into account all of your income, expenses, and debt obligations. Once they have a full understanding of your finances, they will help you determine the best choice to help you get out of debt. One option they may recommend is enrolling in a Debt Management Plan (DMP). In a DMP you make one monthly payment via your credit counseling agency and they disperse payments to each of your enrolled creditors after negotiating on your behalf for benefits such as reduced interest rates, lower monthly payments and waived fees. There are other options that may be a better fit for you so it’s important for you to engage in the free consultation that will allow you to get a personalized recommendation of the best option for your needs.

How long does credit counseling take?

If you are wondering about the actual consultation, you should plan on the initial session taking roughly 30 minutes. There is a lot of information for your counselor to cover and depending on how many questions you have, it could take a bit longer. Once you make a decision about how you want to proceed with the best debt elimination option for you, the solution you choose can take a wide variety of time to work out. If you enroll in a Debt Management Plan to fully pay off your debt, it can take 3 or more years to complete. That may seem like a long time, but think of the long-term advantage of being COMPLETELY DEBT FREE! What would you do with all that money you are currently dumping into debt payments?

It’s a wise idea to make sure you carefully evaluate all the options before you make a decision. Some of our frequently asked questions about credit counseling may help you learn more. If you have additional questions that aren’t covered in this brief guide, feel free to call and speak to one of our counselors today. If you’re still wondering “How does credit counseling work?” -- there is no better place to start than by speaking with an expert!

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2 Responses to How Does Credit Counseling Work?

  1. […] how credit counseling works and how it can help you with your particular debt […]

  2. […] it’s important to know what credit counseling IS! We’ve written a great guide called “How Does Credit Counseling Work?“ Below are some highlights to help you better understand the process at a […]

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