How Can a Credit Counselor Help You Manage Debt?

Jill Bridges
Expert Contributor
Last Updated:
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  • Credit counselors can help with several issues, including debt management plans, budget guidance, and bankruptcy planning.
  • Counseling sessions can last up to 90 minutes but are usually free for a first consultation.
  • It’s important to research accreditation and pricing before scheduling a consultation session with a counselor.

Getting out of debt on your own can be very difficult, especially if you’re in debt with multiple creditors. Fortunately, you can get help with your debt by working with a credit counselor.

Credit counselors are certified professionals that specialize in helping consumers pay off their debt and get their finances in order. When you follow the plan provided to you by your credit counselor, you should be able to pay off your debt and increase your savings so that you’ll have a more stable financial future. Learn more about the benefits of working with a credit counselor and discover some of the services that they provide.

What Is the NFCC?

Many credit counseling agencies that you visit are nonprofit organizations that have been certified by the National Federation for Credit Counseling (NFCC). The NFCC was founded to empower consumers with credit literacy, and it has since grown to provide a number of useful services.

An NFCC counseling agency can consult with you about your debt in person, by phone, and even online in some cases. Counseling services are typically free of charge, which means that you can start working towards clearing your debt without having to worry about spending any extra money.

How Can a Credit Counselor Help You Manage Debt?

Services Offered by Credit Counselors

The biggest benefit of scheduling an appointment with a credit counselor is that they can offer you a wide range of services. A few of the services that you can find at most credit counseling agencies include:

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  • Bankruptcy Guidance: A counselor can help guide you through the bankruptcy process. Your counselor will meet with you to help you prepare to file bankruptcy, and then will meet with you a second time after your debts have been discharged.
  • General Budgeting: A counselor will hold a free session with you and review every area of your finances, including your income, your long-term goals, and your monthly budget. Future sessions may be recommended.
  • Housing Counseling: A counselor can help you with several different housing issues, including advising you about rent problems and helping you plan out the purchase of your first home.
  • Student Loans: A counselor can advise you about your student loans. They can discuss different options for repaying your loan and can even talk with your loan issuer on your behalf.

Many people visit a credit counselor to get help in arranging a debt management plan (DMP), which is basically a debt consolidation option. With a DMP, you’ll make one monthly payment that will be split among your creditors instead of paying them all individually. DMPs may provide lower overall payments and interest rates, both of which are very beneficial. In most cases, you’ll have completely repaid your DMP within three to five years.

Not every credit counseling agency provides all of these services. You should research the services that an agency provides before scheduling an appointment. It’s also a good idea to ask if an agency provides any continuing education classes or other resources that can help you stay out of debt.

What to Expect When Meeting Your Counselor

If you’re thinking about scheduling a consultation with a credit counselor, it’s a good idea to find out what you should expect from your meeting. In terms of time, your session can take as little as 20 minutes or as long as 90 minutes. The specific length will be almost entirely dependent on what type of counseling you’re requesting and the complexity of your issue. Building a debt management plan, for example, can take up a great deal of time.

For a general counseling session, several different steps will take place. In general, your credit counselor will:

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  • Help you develop a realistic budget
  • Review your credit report to see if there is any way to boost your score
  • Give you advice on ways to improve your overall financial situation
  • Refer you to other resources that can help you with your issues

If your counselor reviews your finances, budget, and debt and decides that a debt management plan is in order, they will likely recommend a second counseling session to work on the plan. The counselor may then follow up periodically to see how your plan is progressing.

Before your credit counseling session, there are a few things that you can do to get ready. Giving yourself ample time for the session, for example, is of the utmost importance. You don’t want to have to interrupt your session and not get the full benefit of your counselor’s services.

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Collecting all the necessary documents before your meeting is also a good idea. Your counselor may want to see banking statements, credit card statements, and more to help you with your budget. Err on the side of caution and bring more information than you think you may need to ensure the success of your meeting.

Finding the Right Counseling Agency

If you want to get your finances in order, you need to be sure that you’re working with the right credit counseling agency. Fortunately, there are a few characteristics that you can look for to make sure that you get the best services possible.

First, you should make sure that you’re working with an accredited and certified agency. In general, a nonprofit credit agency will have been certified by either the Financial Counseling Association of America or the NFCC. Certification by one of these organizations generally means the agencies provide quality services on which you can depend.

It’s also a good idea to determine how you’ll interact with the credit counseling agency. For instance, some agencies only offer in-person services, meaning they would be a poor choice if you prefer handling your finances and debt online or by phone. Finally, it’s important that you research costs. While general counseling may be free, not every service will be.

Working with a credit counselor is one of the most effective ways to get out of debt, but if you prefer working with a professional debt relief company, Solvable can help you. We review debt relief companies so that you have the information you need to solve your financial issue, and can connect you with a company that fits your situation.

 

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Jill Bridges
Expert Contributor
Last Updated: