What Is Credit Card Debt Counseling?

If your credit card debt has gotten out of control, credit card debt counseling can be a beneficial alternative to more drastic actions, such as bankruptcy. Credit card debt counseling through reputable organizations helps you to understand your financial situation in detail, as well as what steps you can take to get and keep yourself out of debt in the future.

Choosing a Counselor

Many different organizations offer credit card debt counseling services, but not all of them are working in your best interest. Even when they claim to be a nonprofit organization, some charge high fees that take money away from what you could be paying on your credit card bills each month. Look for credit card counselors that are certified in credit card debt counseling. Any counselor you choose should also be affiliated with a recognized professional organization, such as the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Getting Counseled

Counseling may take place in person, via telephone or online. No matter which route you choose, a counselor will ask you for specific details about your income and expenses, and will help you draw a realistic budget. This will help you track where your money goes, as well as identify areas where you should concentrate on changing your habits. While a credit card debt counselor is not qualified to offer legal opinions, she will discuss your available options with you. Information discussed with your counselor is kept confidential, and counselors may suggest follow-up meetings in the future to track your progress.

Debt Management Plans

One option that a credit card debt counselor may offer you is enrollment in a debt management plan (DMP). Under such a plan, a credit card debt counselor contacts creditors that hold your unsecured debt and negotiates waived fees, lower interest rates and sometimes different due dates for your payments. You then agree to make one lump sum payment to your credit card debt counselor each month, which the counselor then disburses to your creditors on your behalf. If you can stick to a strict budget, do not wish to negotiate terms with creditors yourself and do not wish to file for bankruptcy, a DMP can be a useful solution.

Considerations

As with other forms of counseling, you will get out of credit card debt counseling what you put into it. Additionally, as personal finance expert Liz Pulliam Weston notes, many people wait until they have gotten too far into debt to seek credit card debt counseling. Other options, including bankruptcy, may be faster ways to wipe out your debt and move on with your life. However, if you haven't waited too long and can stick to the advice your credit card debt counselor gives you, it may be the right solution for you.