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What Does a Credit Counselor Do?

Taking charge of your finances so you can get out of debt is an important step toward recovering financial stability. To get there, seeking help from a credit counseling organization can not only help you get started, but provide consistent support as you pay down debt.

Typically, credit counseling organizations are nonprofit agencies that provide counseling from certified counselors.

How Does it Work?

When you make an appointment with a credit counselor, you often are given the option of meeting with them either by phone, video, or in person. During your session, which typically lasts an hour, your counselor will review your credit report with you, go over your household expenses and debts, and provide financial education. At the end of your session, they may provide recommendations on next steps, which may include enrolling in a debt management plan (DMP).

What is a Debt Management Program (DMP)?

When you enroll in a debt management program your counselor can work with with your lenders/creditors to consolidate your loans into one affordable monthly payment, with the goal of paying it off in three to five years. They can also help you get your interest rate reduced.

What Other Services Do Credit Counseling Organizations Provide?

Besides offering credit and budget counseling, credit counseling agencies often offer other services for navigating big financial life decisions. These include:

  • Bankruptcy Counseling: If your debt is beyond the scope of a debt management plan, you may be thinking about filing for bankruptcy. Bankruptcy counselors at credit counseling organizations can review your financial situation and provide you with the information needed to help you with your decision on whether it’s the right choice and offer alternatives. They can also provide the required pre-filing counseling and pre-discharge education.

  • Housing Counseling: Whether you’re struggling to make payments on an existing home or looking to buy your first home, housing counselors can help you navigate your finances through this process.

Bottom Line

Ultimately, credit counseling can help support you as you make decisions about your finances and help you attain a financially healthier situation.

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