Free Credit Card Counseling

Credit card debt drives some consumers to bankruptcy, but the Federal Trade Commission (FTC) advises that credit counseling may help you avoid a drastic court action that puts a negative mark on your TransUnion, Equifax and Experian credit reports for 10 years. Counseling is not always free, and you may need additional paid services after talking to a counselor, but consulting with a professional shows you all your debt-management alternatives.

Definition

Credit card counseling means talking to a professional at a credit counseling firm when your credit card debt gets out of control. The counselor discusses your finances, including income, budget and bills, and offers suggestions for getting your accounts under control. Many credit counseling firms have non-profit status and offer free or very low-cost help. The FTC explains that they make their services accessible by working with you in an office, on the phone or the Internet and putting helpful materials on their website.

Finding a Counselor

Some credit counseling companies charge fees for all their services, including credit card management advice, so the Better Business Bureau (BBB) recommends finding a free counselor through industry groups such as the Association of Independent Consumer Credit Counseling Agencies or National Foundation for Credit Counseling. Get a list of potential firms, then find out which ones are properly licensed in your state. Call each of them and ask about their counselors' qualifications and if there is a cost for any of their services. A legitimate firm might give free counseling but charge a monthly service fee if you get into a debt management plan to pay off the credit cards. It should be willing to disclose charges in writing.

Options

Credit counselors offer various options for handling credit card debt, depending on how much you owe, whether you have a reliable income, your other financial obligations and other personal factors. Sometimes the counselor helps you create a new budget or refer you to money management classes. You may need to get into a debt management plan if you are unable to straighten things out on your own. The counselor works with your credit card issuers on a structured repayment plan that may include forgiveness of late payment fees and even re-aging the account to fix your credit reports if you pay as agreed. Most counseling firms impose a monthly fee on these plans.

Considerations

You are forced to go through credit counseling if you want to file for bankruptcy to get rid of credit card debt or for any other reason, according to the FTC. The session shows you possible bankruptcy alternatives. There is a fee, but you get the counseling free if you cannot afford it. You must undergo more counseling if proceed with the bankruptcy before your case is completed. This additional counseling teaches you to manage credit cards and other financial matters to avoid future problems.