--- title: How Credit Counseling Can (and Can’t) Help With Your Debt description: Credit counseling offers free financial education. You can also enroll in a debt management program for a small fee. authors: - name: Andrea Agostini Ferrer role: Lead Staff Writer url: https://money.com/author/andrea-agostini/ bio: Andrea has been writing for Money Group since 2020. Her articles, which have been featured across a wide variety of publications, have helped our readers navigate multiple areas of personal finance including credit, loans and insurance. She's currently part of our team of insurance experts, specializing in travel and pet insurance. education: University of Puerto Rico at_money_since: 2020 articles: 62 covers: - Personal Finance - Banking - Business - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Pets - Professional Services - Retirement - Shopping - Taxes editors: - name: Kaitlin Mulhere role: Editor url: https://money.com/author/kaitlin-mulhere/ bio: Kaitlin Mulhere has been covering the intersection of college and personal finance since 2015. She enjoys breaking down the complexities of college costs and financial aid, and she also runs Money’s Best Colleges. education: University of Florida at_money_since: 2015 articles: 217 covers: - Personal Finance - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Retirement - Shopping - Taxes social: - https://twitter.com/KMulhere - https://www.linkedin.com/in/kaitlin-mulhere-64503048/ published: '2025-03-06T20:50:38.000Z' modified: '2025-03-06T20:50:38.000Z' section: Personal Finance word_count: 1464 canonical: https://money.com/how-credit-counseling-can-help-with-debt/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Couple looking over expenses while using a laptop](https://img.money.com/2025/02/Debt-Credit-Counseling1.png) Presented by ![](https://s3.consumersadvocate.org/prd/image/image/35862/5198b03c-b89b-4712-b663-39c73b9532fe.webp) Achieve could help you leave debt behind and move toward a better financial future. [Go to Achieve.com](https://money.com/pr/vac9650376d7?ap_referrer=%2Fhow-credit-counseling-can-help-with-debt%2F) Getting out of debt can be overwhelming, especially when you don’t know where to start or what advice to follow. A nonprofit credit counseling agency can help you develop a strategy to improve your financial stability. This can be as simple as a one-time session for free credit counseling and budget planning or a longer-term solution like enrolling you in a debt management plan for a small monthly fee. ## How does credit counseling work? Consumer credit counseling is a great resource with minimal downsides, especially if you’re struggling to stay debt-free or need help achieving your financial goals. A certified counselor can offer guidance, explain budget-planning and outline your options so you can make an informed decision about the best choice for your financial circumstances. ## How credit counselors help you manage debt After an initial evaluation, a counselor will advise you on the best course of action to tackle your debt, whether you need general personal finance advice, bankruptcy counseling or something else. ### Conduct a comprehensive review of your finances A certified credit counselor will start by reviewing your income, assets and monthly expenses as well as who you owe, how much you owe and the status of your debt (whether it’s current or in collections, for example). They may also do a soft pull of your credit report to better understand your individual financial situation. “That initial counseling session helps you better understand your financial capacity and where things stand with your debt,” says Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling. ### Give free budget and financial counseling Working with a credit management organization will give you access to ongoing credit counseling sessions, educational materials and free financial workshops. Sometimes these free services are enough on their own. “Even clients who don't engage in a debt management program and just seek out credit counseling services see about a 47-point average increase on their credit score within two years just by getting some good advice,” says Thomas Nietzsche, vice president of public relations at Money Management International. ### Enroll you in a debt management plan A debt management plan (DMP) is a core product offered by credit counseling agencies. This is a structured repayment program administered by the agency in partnership with your creditors. Your principal balance stays the same but creditors agree to stop collecting late fees, lower your monthly payment and reduce your interest rates. Clients at Money Management International, for example, typically see their rates go from upwards of 25% to 7%, according to Nietzsche. While enrolled, you make a single monthly payment directly to the credit counseling agency. The agency then splits that money between your creditors. This is a popular option among borrowers, according to Nietzsche, who says about one-third of Money Management International’s credit counseling clients enroll in a debt management plan. Among that group, he says roughly two-thirds manage to knock out the majority of their debt (about 80% is typical, he says) over the course of the program — which typically takes three to five years to complete. At that point, many use their accumulated savings to pay off the balance of what they owe and become debt-free, or take out a debt consolidation loan to pay down what’s left over. The option of taking out a [debt consolidation loan](https://money.com/use-personal-loan-to-pay-off-debt/) at that point is available because DMP enrollees often improve their credit scores enough to be eligible for a loan. People who complete DMPs see, on average, an 82-point improvement of their score, according to [year-over-year data](https://www.moneymanagement.org/debt-management/faq/how-a-debt-management-plan-can-impact-your-credit-score) published by MMI. Credit counseling agencies charge up to $75 to participate in a debt management plan, as well as a monthly fee that ranges from $25 to $50, depending on the agency and where you live. ## What credit counselors can't do Before deciding if a debt management plan is right for you, consider that not all types of debt are eligible for these plans. You can apply for a DMP if you have unsecured debt such as credit card debt, medical bills or personal loans. Mortgage loans, auto loans and federal student loans don’t qualify. Credit counseling agencies do not offer financial hardship programs, debt consolidation loans or direct financial assistance. They also can’t force creditors to participate in a debt management plan or to accept new repayment terms. Participation in debt management programs is voluntary, and it’s not unheard-of for creditors to refuse. Although credit counseling agencies have [HUD-certified counselors](https://www.hud.gov/program_offices/housing/sfh/hcc/housing_counseling) who help homeowners avoid foreclosure, mortgage debt can’t be included in a debt management plan. Counselors may be able to help struggling homeowners apply for forbearance or find other options for relief, including selling the property if paying the mortgage isn’t possible. Another common misconception is that credit counseling agencies offer credit repair and debt settlement. What an agency can do is advise you on the best course of action and refer you to a reputable [debt settlement company](https://money.com/best-debt-relief-companies/) or [credit repair agency](https://money.com/best-credit-repair-companies/). Nietzche points out that if a consumer is able to maintain monthly payments to the original creditor through a debt management program, that’s much better for their credit than intentionally falling behind on their bills to build leverage for trying to settle the debt for less than they owe. (Better credit also gives them the option of [applying for a debt consolidation loan](https://money.com/pros-cons-debt-consolidation/) later.) Finally, if a client can’t stick to a repayment plan, a credit counselor might refer them to bankruptcy counseling. ## How to find a reputable credit counseling agency The credit counseling industry had some trouble in the past. A [study published in 2003](https://consumerfed.org/press_release/first-ever-study-of-credit-counseling-finds-high-fees-bad-advice-and-other-abuses-by-new-breed-of-qnon-profitq-agencies/) found that many agencies were engaging in harmful practices including charging high fees, missing payments to creditors and engaging their customers in debt management plans even when it wasn't the best option. In the past two decades, though, the industry has made strides thanks to increased regulation, accreditation standards and more robust oversight. Reputable credit counseling agencies are accredited members of the [National Foundation for Credit Counseling](https://www.nfcc.org/) (NFCC) or the [Financial Counseling Association of America](https://fcaa.org/) (FCAA). These two organizations require member agencies to meet strict accreditation criteria with the goal of ensuring transparency and fair practices. That said, you may still encounter bad actors. “Anytime something sounds too good to be true or promises an unrealistic timeline, it’s going to be a red flag. Most people didn’t get into debt overnight, and it’s not going to be overnight for most people to get out of debt,” Nietzche says. Some red flags to watch out for include: - Asking for upfront payment without providing a service or doing anything for you. (This is illegal.) - Unrealistic promises; credit counseling agencies, for example, cannot settle your debt for less than what you owe. - Lack of transparency about their fees or the services they provide. - Charging excessive fees above and beyond nominal set-up and monthly fees. - Lacking certification from the NFCC or the FCAA. ## Debt management plans vs. debt settlement Debt management gives you a structured plan to repay your debts, often with lower interest rates and relief from late fees. You can save money with a debt management plan, but you’ll still ultimately pay back your full principal balance. Debt settlement entails [negotiating with creditors](https://money.com/negotiate-credit-card-debt-good-idea/) to settle your debt for less than what you owe, often in exchange for making a lump sum payment. Another big difference between [debt settlement](https://money.com/difference-between-debt-relief-and-debt-settlement/) and a debt management plan is that debt settlement typically requires you to stop paying your creditors to build up leverage for negotiations, which can damage your credit score. A debt management program, on the other hand, can help you rebuild your credit because you continue making payments. ## Debt management plans vs. debt consolidation Debt management plans and debt consolidation loans seem similar — both [consolidate your debts](https://money.com/ways-to-consolidate-debt/) into a single monthly payment and can lead to savings via a lower interest rate. But there is a fundamental difference: Debt consolidation requires a good credit score and limits the amount of debt you can consolidate, while borrowers with any credit score and any amount of debt can qualify for a debt management program. People who have good credit scores, make their payments on time and just want a single payment and a lower interest rate would probably be better off with a consolidation loan or a [balance transfer](https://money.com/what-is-a-balance-transfer/) credit card, McClary says. A debt management plan is a good option for borrowers who want debt consolidation but whose credit score is too low to qualify for a new loan, or who have so much debt that they can't get a high-enough loan limit, Nietzsche says. ## Achieve offers proven programs to tackle debt ### Simplify multiple debts with debt consolidation loans, or let expert negotiators reduce and resolve your debt faster than with monthly minimum payments. Click below to get started. [Learn More](https://money.com/pr/pf18035ec834?ap_referrer=%2Fhow-credit-counseling-can-help-with-debt%2F) Terms and conditions apply. **More from Money:** [Credit Counseling vs. Debt Relief: Which Is Right for You?](https://money.com/credit-counseling-vs-debt-relief/) [5 Things People Get Wrong About Debt Relief](https://money.com/debt-relief-myths/) [Answer These 6 Questions to Find the Right Debt Payoff Plan](https://money.com/plan-to-pay-off-debt/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/how-credit-counseling-can-help-with-debt/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Personal Finance", "item": "https://money.com/personal-finance/" }, { "@type": "ListItem", "position": 3, "name": "Debt Management", "item": "https://money.com/debt-management/" }, { "@type": "ListItem", "position": 4, "name": "How Credit Counseling Can (and Can’t) Help With Your Debt" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/how-credit-counseling-can-help-with-debt/#webpage", "url": "https://money.com/how-credit-counseling-can-help-with-debt/", "name": "How Credit Counseling Can (and Can’t) Help With Your Debt", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-03-06T20:50:38.000Z", "mainEntity": { "@id": "https://money.com/how-credit-counseling-can-help-with-debt/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/how-credit-counseling-can-help-with-debt/#breadcrumb" }, "dateModified": "2025-03-06T20:50:38.000Z" }, { "@type": "Article", "headline": "How Credit Counseling Can (and Can’t) Help With Your Debt", "articleSection": "Personal Finance", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/02/Debt-Credit-Counseling1.png", "width": 1036, "height": 689, "caption": "Debt-Credit-Counseling" } ], "author": [ { "@type": "Person", "name": "Andrea Agostini Ferrer", "url": "https://money.com/author/andrea-agostini/", "@id": "https://money.com/author/andrea-agostini/#author", "description": "Andrea has been writing for Money Group since 2020. 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