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What can I expect in a credit counseling session?
You can obtain credit counseling via phone, face-to-face or online, whatever method you prefer, and a typical counseling session can take from 30-60 minutes. During your confidential session, expect to be asked questions about all aspects of your financial situation, and be sure to ask questions about anything you don't understand or want additional information about. You'll need to provide enough financial and personal information for the counselor to recommend a solution or combination of solutions. It is helpful to have your appropriate financial paperwork available during your session, including paycheck stubs, tax returns, credit card statements and any other debt account statements.
Regardless of which solution(s) is recommended, the counseling session should include a comprehensive budget review that examines all sources of income, all secured and unsecured debt, all household expenses, legal issues and any other pertinent financial factors.
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What solutions may be offered in a credit counseling session?
A variety of solutions are available, and your counselor will work with you to find the solution(s) best suited to your situation. Solutions may include a debt management/repayment plan, bankruptcy counseling and referrals, housing/mortgage counseling and referrals, or referrals to social service agencies that assist in financial and consumer issues.
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What is a debt management plan?
Depending on your financial situation, a debt management plan may be a solution recommended during your counseling session. A debt management plan is a structured debt repayment program facilitated by a credit counseling agency.
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How does a debt management plan work?
In a debt management plan, your credit counselor and their credit counseling agency work directly with your creditors (credit card companies) to structure the terms of your proposed repayment plan. When possible, they negotiate lower interest rates and waived late and over-limit fees, which can help lower your balances and reduce the time it will take for you to get out of debt. You then make one monthly payment to the credit counseling agency, who disperses it to each of your creditors until your total debt is repaid in full. You are told up front how long your debt management plan will take and what your monthly payments will be, so you can make an informed decision about whether to begin the plan or not. A debt management plan may be an option but is never mandatory.
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What about the other solutions?
For some, a debt management plan is not feasible due to budget, amount of debt, or other financial circumstances. Other solutions that may be offered during a credit counseling session include bankruptcy counseling and referrals, housing/mortgage counseling and referrals, or referrals to social service agencies that assist in financial and consumer issues.
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Where can I get credit card counseling?
A good places to begin looking for a credit counseling agency is online. Any search engine can help you locate a provider in your area, and you can learn more about the agencies themselves by visiting their websites. Look for agencies affiliated with the Association of Independent Consumer Credit Counseling Agencies (AICCCA), a national membership organization established to promote quality and consistent delivery of credit counseling services, and the National Foundation for Credit Counseling (NFCC), who promotes the national agenda for financially responsible behavior and builds capacity for its members to deliver the highest quality financial education and counseling services. Both of these organizations and their websites can help you find professional credit counseling. See References for links.
Credit Card Debt Counseling InformationCredit card debt counseling can help consumers in debt find a solution that fits their budget and overall financial situation. Credit card debt can be overwhelming, especially if you are behind on payments and are being contacted by collection agencies. Credit counseling agencies can provide options and recommendations consumers may not be able to facilitate on their own, potentially saving them headaches, money and time. To make the most informed choice about whether credit card debt counseling may be a viable option for you, you need to know what credit counseling is and what benefits it may offer.
