Much like it sounds, credit counseling is where a 3rd party debt management professional fully reviews your financial situation. Then, they work with you and the creditors to map out the quickest and least painful way out of debt. In most cases, they will provide you with the advice and counsel you need to avoid getting into trouble again.

• Reduction in Interest Rates: One of the primary goals of a credit counselor is to negotiate with the creditors for reduced interest rates. This ultimately helps you pay off your debts faster and for less.
• Lower Monthly Payments: The lower interest rates will lead to lower monthly payments and give you some much-needed breathing room in your budget.
• No More Harassing Phone Calls: By negotiating repayment plans with each creditor, the harassing phone calls will stop so long as you make the agreed upon payments. This is a tremendous stress relief for many and a large advantage to credit counseling.
• A Clear Plan To Becoming Debt Free: Simply knowing that there is a plan in place and a clear path to becoming debt free can be a huge relief for someone drowning in debt. The credit counselor will help you create a map to being debt free while also advising you on how to avoid repeating the mistakes that got you into financial trouble in the first place.

With credit counseling, your overall debt burden will not decrease but it will help you pay that debt down faster. Also, there will be some fees assessed for the services provided by the credit counselor. In most cases and for anyone with more than $10,000 in unsecured debt paying 15% or more in interest charges, the fees often more than compensate for the savings.

Finally, when you enroll in a credit counseling program, your creditors will likely note this in your credit report. Some will view this in a positive way as they see you are taking your debts seriously and doing something about them. Some, however, will regard this action negatively as they see you are having problems paying your bills on time. Your credit counselor may be able to negotiate with the creditors not to negatively impact your credit rating in return for adhering to the repayment plan so be sure to bring up when you speak with them!