What Is Credit Counseling?

Blueprint for Financial Prosperity has a a good article on what credit counseling is, what to expect if you use a credit counseling service, and things to watch out for.

Credit counseling, also known as debt consolidation, is professional counseling provided by organizations that help consumers find ways to repay their debt - through careful budgeting and management of money. This is usually performed by the credit counseling agency taking over your debt payment; you agree to pay a certain amount each month to the credit counseling agency, which is then paid out among all of your creditors.

There are many non-profit credit counseling organizations are nonprofit that will work with you to solve your financial problems. But just because an organization says it is “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, urge consumers to make “voluntary” contributions that can cause more debt, urge consumers to enter “debt repayment plans” they simply cannot afford.

Go check out the entire article.