Like many people in the U.S., if you’re struggling with debt, you might be thinking about credit counseling. Organizations that provide credit counseling are typically nonprofit organizations that advise you on your finances — with the goal of helping you get to a place of financial well-being.
What to Expect
The day of your appointment you’ll want to make sure you have all your bills and household expenses together. Your credit counselor will go over all your finances with you, including your debts, and will often review your credit score with you. They may also provide educational materials and information about workshops that can help you become more financially literate. During your session, your counselor will help you build a budget, so you can better manage your expenses and pay down debt. At the end, they may make recommendations about next steps, which may include enrolling in a debt management plan (DMP).
Debt Management Programs (DMPs)
If your counselor recommends enrolling in a debt management program, they will work with your lenders/creditors to consolidate your loans into one monthly payment (typically lower than what you were previously paying) and reduce your interest rate. DMPs are also designed so you can pay off your loans in three to five years.
More Services Offered by Credit Counseling Organizations
Many credit counseling organizations offer more services in addition to credit and budgets counseling. Other services include:
Bankruptcy Counseling: Deciding to file for bankruptcy is a big decision, but it’s a decision that a bankruptcy counselor can help you with—whether it’s offering alternatives or providing you with the required pre-filing counseling and pre-discharge education.
Bottom Line
Deciding to take control of your finances with credit counseling is a step toward financial recovery, whether you need budget and credit counseling, or other services like bankruptcy or housing counseling.
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