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Nonprofit Credit Counseling Explained

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You’re in debt and collectors are calling you on a regular basis. Or, you’re in debt, know that you can’t make the payments and are looking for a way out. In either case, nonprofit credit counseling can help. Counseling won’t wipe away your debts, but it will help you develop a plan of action to reduce them and eventually become debt-free.

Who Offers It?

Credit counseling is usually offered by a nonprofit agency that employs certified credit counselors. According to the Federal Trade Commission, there are a number of things to look for when choosing an agency. You want an accredited agency that has a positive rating with a consumer protection agency, such as the Better Business Bureau. The counselors that work at the agency should also be certified by an organization such as the Association of Independent Consumer Credit Counseling Agencies or similar.

Who Does It Help?

Counseling can help you if you are struggling with debt and are unsure how you’ll pay it off. It’s a solution for people that are considering bankruptcy but want to explore all of their options first. It’s also a requirement if you’ve already filed for bankruptcy.

What Happens During It?

During a counseling session, your counselor will review your current financial situation, including your debts, income and other expenses. He or she can help you put together a budget so that your expenses don’t exceed your income, show you areas in your financial life where you are overspending and where you can cut back to improve your financial future. A counselor can also help create a road map to help you achieve any goals financially. Credit counseling is an individualized process, so what exactly happens during a session will depend on your situation and what you hope to get out of it. Sessions are flexible and can take place in person, over the phone or on the Internet, depending on your preference.

What Happens After It?

What happens after a counseling session depends on your situation. It might be that working with a counselor to create a budget is all the help you need, for example. Or, if your debts are overwhelming, the counselor might recommend enrolling in a debt management plan and walk you through the process of doing so. In a debt management plan, the counselor negotiates with your creditors on your behalf, potentially getting you a reduced interest rate or getting them to waive fees. You then make payments each month to your counselor, who distributes the money to your creditors. A credit counselor can also help you work on rebuilding your credit after the counseling session and after you’ve paid off your debt.

Is It Free?

When offered by a nonprofit agency, credit counseling is usually free. Having to pay a fee for counseling is often a sign that the agency isn’t looking out for your best interest. Along with offering counseling for free, an agency should provide you with free information and should be willing to help you, without demanding that you provide a lot of information about yourself up front.

While counseling itself is free, some services might have a low monthly fee. An agency that’s working for you will usually offer a sliding scale or pay-what-you-can-afford model. Ask for the fees in writing before you decide to work with an agency and steer clear of any that want to charge you a hefty sum upfront.

If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.


Filed Under: Credit Counseling


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Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.


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Financial Information about this organization and a copy of its license are available from the State Solicitation Licensing Branch at 919-814-5400. The license is not an endorsement by the State. 

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