Debt counseling and services offered by a counselor.
Debt counselors can be very successful with helping consumers reduce their debts and improve their overall financial condition. Debt counseling is a service that provides help to people facing financial hardship. Whether you are dealing with credit card debt, hospital bills, payday loans, or even threats of legal action, these counselors work to give you back control over your finances. Learn more on debt counseling and how to find a counselor below.
A debt counselor is a trained professional who helps people understand their financial situation and offers personalized solutions to reduce or eliminate debt. Most work for nonprofit credit counseling agencies, which are approved by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). However there are also “private” companies that offer debt relief services using a counselor.
Who benefits from debt counseling?
Whether you are trying to stop collection calls or letters, or just get advice on how to improve your finances, a counselor will give you real tools and support. Debt counseling is available to anyone, but it is especially helpful for families behind on credit cards or people living paycheck-to-paycheck and using payday loans. A counselor will also help people who are dealing with medical debt(s) or hospital bills.
If you are not disciplined, do not know how to tackle your debt on your own, or if you need help creating a workable budget and sticking to it, you should strongly consider contacting a debt counseling organization. Other reasons to contact a n organization include maybe you can’t keep track of your financial obligations, or if you are unable to work out a repayment plan on your own with your creditors, can’t get a debt consolidation loan and in general need help dealing with them a creditor or debt collector.
Using a debt counselor has been proving to be effective. According to the National Foundation for Credit Counseling, which tracks and represents thousands of counselors in the U.S., 60% of clients complete the plans successfully and they get the help they need with paying debt and bills.
What types of debt do counselors help with?
Many debt counseling organizations are non-profit organizations, offer free or low priced advice, and they will work closely with you to help solve your financial problems. Counselors assist with nearly every kind of unsecured debt, including the following. Some will also help consumers with secured debt, such as a home loan or student loan. The main focus is on these though.
Credit card debt is a focus. Counselors can often reduce your interest rate from 20–30% down to single digits or so, such as 6–10%. The counseling process will also consolidate multiple cards into one monthly payment as well as help with negotiating to waive late fees or stop over-limit penalties.
Medical debt can be covered too, though it is not as common. As a medical bill advocate may be the best option there. But some debt counselors help identify billing errors and challenge inflated charges. Or they help determine if older medical or hospital debt it’s beyond the statute of limitations for the state.
Debt counselors also focus on helping people with personal loans. Whether it’s from a bank, a payday lender, BNPL lender or online, they’ll help manage repayments. Counselors may contact the lender on your behalf to create new terms or reduce payments. In addition, a debt counseling agency will explain what happens if you default and how to avoid it.
Collections and legal debts help is offered. If your debt has gone to collections or an option may be filing for bankruptcy, counselor will guide you on how to respond. They can help stop court judgments, wage garnishments, or liens by negotiating payment arrangements. You’ll also get help understanding your consumer rights under federal law. Or look here for charities that give free bankruptcy consults.
Questions to ask a debt counseling organization
When you are ready to contact them you can e-mail, or call the consumer debt counseling agencies. You should ask them a few questions such as below. You should get the answers in writing as well, so contacting them over the internet and e-mail is usually your best option.
- What training do your credit counselors have? Are they accredited or certified?
- Who regulates or oversees your agency? Is your company or agency audited annually?
- Are there any fees for your services? If so, what are they? Do I need to pay anything up front? Are there any monthly fees I need to pay? How are those fees they calculated?
- Will you give me ongoing budgeting help and advice, regardless of whether or not I enroll in a debt management plan or program? Is a debt management plan the only option you can give me for long term relief?
- How does your service work? How will you ensure that all my creditors and debts will be paid in the correct billing cycle and by the applicable due dates?
- How are the amount of my payments on all my bills determined?
- How often can I get updates and reports on my accounts? Can I get access to my credit card and outstanding bills online or by phone?
- Can you get my creditors to eliminate or lower finance and interest charges, or waive late fees? Can you help consolidate debt?
- Is there any debt that you will not help with paying, and aren’t included in the services from your agency? If so, what can you do to help with those bills?
- Do I have to make any payments to my creditors before they will accept the proposed payment plan?
- How/will signing up for your debt counseling affect my credit scores over the short and long term?
- Will your debt counseling organization still help me create a budget and teach you money management skills? Do you provide free advice or educational materials? If so, how can I obtain them?
- If I make regular, timely payments towards my past due bills, how long will it take me to complete the debt relief plan in my case?
- Those are just a few examples of what to ask. Find a more extensive and detailed list of what questions to ask about debt settlement.
Locate debt counseling agencies
There are hundred of debt counseling agencies and independent counselors located across the nation. Some of them operate in certain regions of the country, some are national, and some are local. Many agencies are also non-profit. No matter which agency you contact, always be sure to closely review any fees that may be involved in this process. Click here to find a list of credit counseling agencies.
The Financial Counseling Association of America, or FCAA, also have counselors that focus on debt repayment services. There are other free money management services arranged with details on this site. https://fcaa.org/find-a-credit-counselor/?service-type=80.
Most credit counselors offer their services using the Internet, the telephone, or local offices. Sometimes it is good to find an organization that offers in-person counseling for that personal touch. More on National Foundation for Credit Counseling.
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