Consumer Credit Counseling Services

Most consumer credit counseling services firms are members of the National Foundation for Credit Counseling (NFCC), a national non-profit organization. The primary purpose of these member organizations is to enable consumers to become debt free, ultimately allowing them to re-gain control of their financial futures. The services offered by these firms can include money and credit management education courses, personal budget management, credit and debt counseling, debt management plans (DMP), homebuyer education, mortgage delinquency counseling and bankruptcy counseling.
The primary benefit of working with consumer credit counseling services firms is that they can create custom financial programs to meet an individual's specific needs. Many firms will offer several methods of education and/or communication including in-person, toll free hotlines, and online. Each credit counselor has received training in their areas of expertise and often have backgrounds in either finance and/or counseling.

If you are currently able to meet your credit obligations on a monthly basis and do not have any accounts which are currently late, you are not likely a candidate for consumer credit counseling. If you are interested in reducing your current interest rates, contact each of your accounts individually to discuss reducing your rates. Due to the competitiveness within the marketplace today, you will often find creditors willing to work with you to accomplish your goal. Reducing your interest rates will reduce your total required monthly payments to each account and will enable you to become debt free in a quicker fashion.
If you are late on one or more of your credit accounts, are being actively contacted by credit collection agencies or creditors or are unable to meet your minimum monthly payment requirements, consumer credit counseling is likely a viable next step for you to consider.

What happens at a credit counseling session? In most situations, a trained counselor will review your financial information in a non-judgmental fashion in order to provide multiple possible solutions. All of the communication between you and your counselor will remain strictly confidential! One of the first steps you will complete with your counselor will be putting together a realistic household budget in which you will need to begin following immediately. While most consumers don't like following a budget, this is a necessary step for not only eliminating your debts, but for building a solid financial future.
In addition to working through your personal household budget, counselors may also discuss tips for developing strong spending habits, credit card management tips, and general money saving tips. If your debts have become unmanageable, your counselor will work with you to determine the best course of action. Common solutions could include debt consolidation, negotiating your current interest rates with each creditor, debt settlement, debt management plans and bankruptcy.

A debt management plan (DMP) involves setting up a debt payment schedule for a consumer. You will agree voluntarily to deposit funds with your consumer credit counseling firm each month. The firm will send those funds on your behalf to your creditors as outlined. The purposes of a DMP are to help you repay your debts in an organized fashion as well as to enable your creditors to receive the funds owed. Once you enroll in this type of payment program, you will be unable to continue to use your accounts. Most consumer credit counseling firms will work with you to re-establish your credit once the accounts have been successfully paid in full. Participation in a DMP may negatively impact your personal credit score.
If your debt cannot be successfully managed with any of the options mentioned above, your counselor may discuss debt settlement and/or bankruptcy options with you.
Working proactively to resolve your debt concerns is the best course of action. While you could work through this process on your own, most individuals find greater success working with a trained partner. Consumer credit counselors offer consumers objectivity, training and the resources required to navigate from start to finish in the debt management and elimination processes.