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Non-Profit Debt and Credit Counseling

Free and low cost financial literacy tools are offered by local as well as national non-profit debt and credit counseling agencies. The organizations help clients of all income with everything from debt management plans to credit repair, free budgeting advice, financial coaching as well as other financial programs. Find more details below.

“Counseling” is often something that has a high price tag attached to it, so it’s understandable that some people automatically assume that credit counseling is something they can’t afford to pay for. But did you know that federal government law requires that free credit counseling be made available in all states?

The U.S. Trustee Program, which was created as part of the 1978 Bankruptcy Reform Act, requires that all consumers have access to low cost or free assistance as well as advice. It can also help people who file for bankruptcy undergo credit counseling before they do so. The trustees as well as counseling organizations that facilitate most types of bankruptcy cases or that offer financial literacy help are heavily regulated in how much they charge and how they charge it. To this end, many non-profits therefore provide free credit counseling, or provide a fee waiver to those making less than a certain income threshold.

Always keep in mind that you’re not required to file for bankruptcy if you undergo this free counseling from a non-profit. The whole point of it is to determine what the best personal as well as financial path for you is given your circumstances – and that path might not be bankruptcy.

How do you find these free agencies?

You’re looking for non-profit agencies approved by the Department of Justice (the branch of government that runs the U.S. Trustee Program) and by the state you live in. These agencies are approved to offer something called “budget and credit counseling services” to clients, and many will offer at least one initial counseling session at no cost.

You have to be careful here, because there are for-profit agencies that also offer “initial free credit counseling” or financial advice. Instead of meeting the obligations that a registered non-profit agency is required to, these agencies will usually just try to sell you services as soon as you come through the door.

The Department of Justice website maintains a list of approved agencies organized by state and jurisdiction; you should check any agency you are considering against this list. An agency that is not on this list isn’t necessarily going to scam you or try to sell you unnecessary services, but they should be researched with extra caution. Find the DOJ approved credit counseling agencies.

Free non-profit credit counseling agencies for financial help

We mentioned at the start that all states have agencies offering these free government-approved services. The two states that offer a slightly different financial literacy program then the U.S. Trustee Program are Alabama and North Carolina. Services are still available there, but things work a little bit differently.

In those two states, local bankruptcy administrators for a region approve agencies and establish the fees that they can charge. There are some legitimate free credit counseling options available in these states, but you will need to check with the administrator for your region to find out who is approved by them and what the terms are.

How to get free debt or credit counseling

Just call them! Many agencies offer free in person, online chats or videos, free phone consultations, as well as other means to communicate. You do not need to be in overwhelming debt or filing bankruptcy to use a non-profit. In fact, these agencies regularly deal with clients who are simply in need of budgeting or debt management advice and steer them toward appropriate resources.

Who is a good fit for free credit counseling? Primarily, anyone who is struggling with debt or just needs help in gaining financial proficiency or improving their money management skills. If your minimum debt payments exceed 20% of your income or are enough to cause you to cut back on necessities, a credit counseling service is designed for your situation and has resources that can help. Or is you just want to learn about budgeting, buying a home, or get any other financial help, a non-profit credit counseling agency can often assist.

These agencies can also help during stretches of hardship and financial catastrophes. These agencies counsel clients during job losses or working hour cutbacks, periods of unusual increased expenses, or during divorces or periods of spousal separation.

You may also benefit from credit counseling if you have a low credit score you are looking to improve. A counselor may be able to suggest ways to more effectively restructure and address your debt that gets it paid faster and improves your FICO score.

Think of it this way; a non-profit credit counseling agency is there to intercede with people who are beginning to be at risk of a financial emergency or bankruptcy, so that they can find ways to keep from sliding into it.

What should I expect from free credit counseling?

At minimum, you should get one initial free session of counseling that lasts for up to an hour. The counselor might advise more sessions after that, which may have a fee (but may also have an income-based fee waiver so therefore be free). Or, they may direct you to a program that is suited to your circumstances. Agencies often conduct this session over the phone, and some even have the ability to do it online.

Credit counseling can lead to a number of solutions as well as financial literacy assistance programs. It can even include a recommendation of filing bankruptcy, but that’s usually an “if all else fails” scenario. Credit counselors often refer their clients to a debt management plan or program. This is a service that the agency often provides internally. There is usually a fee, but the service is regulated and there might be fee waivers or reductions based on your income.

Each state usually sets a reasonable maximum that can be charged for a debt management program. Even though there may be a low fee, they can end up saving you money overall by reducing your payments through negotiation with your creditors or other debt holders.

If your situation isn’t too complicated, the counselor might not even refer you to a program. They may help you set up a “DIY” strategy to better structure your payments and reduce your overall costs. They even give information as well as workshops around how good debt can be beneficial to your finances.

What services do non-profit credit counseling agencies offer?

We’ve covered the initial free credit counseling session. After that’s complete, the agency will usually have all sorts of supplementary services as well as financial literacy development programs to help with a variety of situations. Each not for profit agency will have its own menu of services, but you can expect to find any or all of the following at a government-approved non-profit organization.

Debt Management Programs (DMP) or plans are offered. A fee is usually charged for debt management programs because a credit counselor gets personally involved in the process. They will look over your financial records, help you structure payments and provide other advice as needed. 


But the main feature is debt consolidation. The counselor collects and organizes all of your debt as well as credit responsibilities into one monthly payment. It will streamline as well as simplify the payments you make each month.

As part of this process, the credit counselor reaches out to the companies you owe money to and attempts to negotiate a debt reduction, fee waivers and/or lower interest rates. Companies are often receptive to this if you are going into a debt management plan with an accredited agency, as it increases the likelihood that they will recover most of what they are owed. It also usually has the benefit of stopping calls from creditors if any of the bills are past due. Read more on debt management plans helping with bills.

Home ownership support or buying programs are available at many non-profits. If you’re thinking about buying a home, your goals are not necessarily incompatible with debt or credit counseling. As it builds off a number of basic as well as advanced financial literacy skills. A home is often a money-saving move for renters, as you begin building equity and sometimes even reduce your monthly housing costs.

These counselors are familiar with various options for first-time and low-income home buyers, such as HUD mortgage insurance and USDA guarantee programs for buying homes in rural areas. They can help you to identify a financial literacy program that fits your circumstances and get you prepared for all the steps.

Counselors can also help you prepare for being approved for a mortgage by getting your credit in order and making sure that you meet the standards that lenders will ask for. Some non-profits will also help you apply and even fill out the applications.

Free credit repair services from non-profit agencies help consumers of all backgrounds. These organizations don’t have any secret tricks to magically make your credit better, but they can do a couple of things to help you get it under control.

One is to sit down with you and recent copies of all your credit reports, going through each item to make sure you understand what it is and how to best handle it. Another way is to help you structure your debt payments in the most manageable way. If you can manage to make timely payments, your credit will improve.

General financial literacy tips as well as budgeting advice is available, often from free classes or workshops. Budgeting can be tough for a lot of people, especially when it’s a situation they are suddenly and unexpectedly thrown into. But it is a critical skills to have and develop.

Credit counselors can teach you not just to create a budget, but also how to adjust it as circumstances change and stick to it. They can also demonstrate specific techniques, like creating simple expense tracking worksheets, using smartphone apps to simplify the process, analyzing spreadsheets and more. Find additional details on the budgeting process.

As noted, Bankruptcy Support is a key assistance program. The main purpose of credit counseling is to avoid taking the extreme step of Chapter 7 or 11 bankruptcy, but sometimes it is the only remaining option that will work.

If that ends up being the case, free or low cost bankruptcy counseling is more than just a formality to clear to proceed with filing. A good counselor will prepare you for all of the potential problems it can cause (like having to give up credit cards, inability to secure a loan or potential employment or housing issues it could cause). They will help you get back on track with your finances.

Foreclosure prevention can be used to help save your home. If debt or a mortgage payment is threatening your housing with the possibility of home foreclosure, these agencies can connect you with a specialist HUD-approved counselor to go over your options. Many non-profits also combine foreclosure as well as debt counseling.

Non-profit credit counseling agencies help with all types of housing programs – whether renting or homeownership. As learning how to save money to pay the rent,= or mortgage, or to increase your income, are all important financial skills to have.

Reverse mortgage counseling can be offered to seniors, whether low income or not. These organizations also often provide the mandatory federal government counseling required before one can take out a reverse mortgage (aka a “home equity conversion mortgage”).

As many people may know, reverse mortgages get a bad rap as the terms usually make them a poor option for all but a fairly narrow set of circumstances. They tend to be a “kick the can down the road” option that just makes things worse later unless the borrower has paid off their house, plans on staying in it for the rest of their life, is certain they can keep up with maintenance costs and taxes, and is not planning to leave the house to someone when they pass on (or the recipient is certain that they can immediately get a regular mortgage to cover the outstanding balance). A reputable non-profit credit or debt agency can give you an honest assessment of how a reverse mortgage would fit your personal circumstances.

Small business coaching or start up advice. Those who own a small business or are looking to start one may well benefit from some financial coaching from a non-profit agency. As growing a business can be challenging, and they are risky to start.

Counselors help business owners separate personal finances from business funds, go over advantageous business structures, help them track their finances and become more knowledge to key financial terms and help to get a handle on business concepts like expenses or asset management. All parts of small business and financial literacy are covered by the free or low cost non-profit credit counseling coaching services.

Free Online Tools and Technology Resources can be offered. Some of these organizations, such as the NFCC and Advantage CCS, offer some helpful online tools to their clients. Most are free to use or there are even apps for them.

These tools include different budget calculators for all types of situations, credit card payment calculators, monthly expense planning tools, and online courses. Or learn and get access to TurboTax, QuickBooks, as well as other on or offline financial literacy tools. They even help children and teens learn the basics of financial literacy.

Final thoughts: preparing for and benefits of credit counseling

A credit counselor will want to know what your current income, expenses, and debt amounts are. They will want to know about your employment situation as well as skillset. If you currently use some sort of budget to manage your finances, you should tell them about that too. The more information you have and documentation you bring on your financial situation, the more beneficial the process will be,

For your initial free session, you probably won’t need to enter into an immediate program. If you return for future sessions or enter into a debt management plan, however, you’ll want to have specific amounts and due dates in writing. Bring pay stubs, credit card statements, mortgage information, student loan payments and any other documentation you might have of regular expenses.

Or, you can always contact a free non-profit debt or credit counselor to learn about the other financial literacy programs they may offer. Take a budgeting workshop. Or learn about investing or living within your means. The U.S. Trustee Program created these credit counseling organizations to offer all sorts of low cost or free help to clients.

By Jon McNamara