LOG IN

Credit Counseling Services

Credit counselor meeting with a couple
Credit or debt counseling services are typically offered by nonprofit organizations and focus on budgeting and debt management. They are permitted to charge for these services. They do not consolidate debt; however, when authorized by the client, they are permitted to collect a single sum each month and distribute payments to creditors. They can also work with creditors on your behalf (when authorized by you) to try to lower finance charges and monthly payments and avoid collections. Their main objective is to help you lower your overall payments so you can live within your budget and make your way out of debt.

Nonprofit debt counseling can include the following services:
  • Help building a budget and debt payoff plan
  • Entering into a formal debt payment arrangement
  • Negotiation with creditors on your behalf
  • Asking creditors to agree to forego late fees and not continue collection efforts
  • Setting up payment plans with your creditors
  • Working to lower your interest rates
  • Help rebuilding your credit (this will naturally occur as debt balances are reduced and on-time monthly payments are made)

What kind of credit counseling services can DMBA financial planners provide?

DMBA financial planners can provide credit counseling coaching and education to help you with the following:

  • Evaluate your budget and build a spending plan
  • Build a plan to pay off your debt
  • Understand debt consolidation options
  • Understand your credit score and how to improve it

DMBA financial planners work in an educational role only and cannot collect debt payments or negotiate with creditors on your behalf.


Know the difference

When dealing with debt, getting the right support can be extremely helpful, but it is critical to understand the differences among the services offered.

  1. Credit (or debt) counseling services are financial education organizations that focus on helping you set up debt payment plans and organize your finances. They can (when authorized) work with your creditors to try to negotiate lower interest rates and/or payments.
  2. Debt consolidation means you are working with a lender who will require you to apply for a loan. Loan proceeds are then used to consolidate multiple debts into one loan.
  3. Debt settlement companies do not lend you money; instead, they ask you to send them money which they will use to try and negotiate reduced payoffs on your debts. They will ask you to stop making payments on your debts and send them a monthly amount instead, which could lead to damaged credit.