What is Debt Counseling?

Anyone who has ever performed an online search to find the answer the question, “What is debt counseling?” Will quickly learn how little information is available on the subject. The truth is no one really addresses the question with straightforward answers. One thing is for certain; there is an ever-growing list of companies that classify themselves as debt counseling organizations. What are they supposed to provide? Should they be licensed and/or certified? What type of training should they have? How can we tell the legitimate ones from the charlatans? We’re going to answer those questions and more.
   
How Did the Term (Debt Counseling) Come About?
The term debt counseling came about as more and more Americans found themselves over encumbered with credit card debt, personal unsecured loans, ARM’s and late mortgage payments. As the bills piled up, and debt collectors intensified their collection efforts, consumers furiously searched for solutions.

One thing was clear, a lot of folks didn’t want to file bankruptcy to get from under their stressful debt load. As they searched for other options, namely counseling and advice, savvy entrepreneurs caught wind, saw a need and filled it. The next thing you know, debt counseling companies and organizations started popping up everywhere.

What Service(s) Does a Debt Counseling Company Provide?
The simplest way to understand what these companies provide is to first know what they don’t provide. They DO NOT eliminate debt. They DO NOT wipe out debt. They DO NOT erase debt. Nor do they provide debt relief. If you see or hear about a debt counseling organization claiming to have a technique, trick or method to wipe out, erase or eliminate debt, run from them and I mean run away fast!

You don’t have to wonder about them, they are not legit. A reputable organization provides professional guidance to assist debtors in resolving their financial troubles. They provide debt advice and counsel after examining a person’s overall financial picture.

What Does a Debt Counseling Session Entail?
All of the information provided in this section assumes that you’ve signed an agreement with a debt counseling company. You start by meeting with a debt counselor who goes over your current financial standing. This includes a credit check, a detailed list of your creditors and expenses and a breakdown of your income. They will also enquire about any pending litigation issues, such foreclosures, garnishments, levies and civil filings related to your debts. After all of that information is obtained and verified, the debt counselor sets up a workable budget. Meaning one that both you and your creditors can live with.

How Does a Debt Counseling Company Make Money?
Depending on the company, their revenue can come from a number of sources. Some charge an up front fee anywhere from $300 to $1000 and more. Our advice, stay away from this type of company altogether! Most cut deals with the creditors to which they receive a percentage of all the payments made to the creditors. Other charge what they call an administration fee. This simple means that after you sign an agreement with them and start making payments, they get to keep the first (one to three) payments. As you can see, companies that use this option puts the customers in greater debt and a worse credit score than before. Our advice, avoid companies that bill in this manner.

What Qualifications Should a Debt Counselor Have?
At this point I need to remind you, we are talking about your financial future. The wrong decision could make an already stressful situation spiral into financial depression. The last thing anyone with debt issues needs is an untrained, inexperienced or non-certified person trying to guide them through testy waters.

What should you look for in a debt counselor? First and foremost, they should have a degree in finances/counseling. And secondly, they should be a Certified consumer credit counselor. If a person doesn’t meet these two criteria’s, you are taking a great chance in allowing them provide you with debt counseling.

What Is The Best Way To Find a Reputable Debt Counseling Organization?
There are many ways, (phone book, newspaper, local church, word of mouth, etc.) but by far, the best and most expedient way of finding a reputable debt counseling organization is by searching online. The astounding thing about the information available via the Internet is that it is up to date and can be accessed from practically anywhere in the world.

We've all utilized the web before, but we seldom use it to its full extent when browsing for information. When you are faced with mounting debt and need to find info fast, it is important to use your time to its fullest.

People who read this article also read...

• Debt Counseling 101 – Look Before You Leap
  
  If you are facing a stack of bills and mounting pressure from debt collectors many people will advise you to get professional debt counseling. But before...
• A Word of Warning About Debt Counseling
  
  Like a thieves in the night, numerous legitimate looking companies that claim to provide debt counseling are turning out to be nothing more than
• Q and A's About Debt Counseling Companies
  
  When it comes to obtaining debt counseling, the operative phrase is, “Look before you leap!” That simply means know what you’re getting into before...
• Debt Counseling by Consumer Credit Counseling Service
  
  If you are seeking debt counseling, one of the best places to start is with a company with a proven track record. Consumer Credit Counseling Service meets...
• Find Debt Help Through Consumer Credit Counseling
  
  Find Debt Help Through Consumer Credit Counseling. If you have a debt problem, taking immediate action is imperative.
• Become a Certified Consumer Credit Counselor
  
  Help Americans get out of debt, become a Certified Consumer Credit Counselor, we’ll show you how. It's easier than you think...
• Why Are So Many Illegitimate Debt Counseling Companies Popping Up
  
  If you have performed any type of search on the Internet for debt counseling, you’ll find an endless number of companies making claims that seem...

William Phillips brings a degree in economics and an unwavering passion to help fellow Americans come from under the clutches of debt. He believes that with the right debt advice or debt counseling, anyone can recover from the stresses of being overwhelmed with credit card bills and other debts.