How Can Credit Counseling and Debt Relief Services Help?

Making a dent in mounting debt can feel like you’re trying to swim across a vast ocean. It can be easy to lose perspective and get lost in the depths of your financial situation. But sometimes, all it takes to make it to the other side is a life vest in the form of credit counseling and debt relief services. 

Credit union credit counseling from your local credit union can help you find the right course toward reducing your debt. Meanwhile, keep your head up and keep reading to learn more about how the best credit counseling services can help you get there, one stroke at a time. 

Credit counseling

What is Credit Counseling?

Credit counseling is a service that helps people in debt take control of their finances and create a debt relief plan through avenues such as money management courses and budget planning workshops. 

How can credit counseling help? The main goal of these services is to help people eliminate debt by following proven debt-reduction strategies. Those debts could include anything from home mortgages to auto loans, or credit card overages to student loans

Credit counseling services are available through organizations like financial institutions, not-for-profit agencies, and for-profit companies. In fact, your local credit union may be able to help guide you toward the best solution, thanks to the member-friendly not-for-profit business model and low or no-fee structure of credit unions.

No matter what direction you take, it’s necessary to research credit counseling programs before joining, as some for-profit companies may have high service fees that counter your money-saving goals. 

Credit counseling strategies include: 

The best course of action to take will depend on your unique financial situation. Your credit counselor will help guide you to a decision that suits your needs. 

Services Available at a Credit Counseling Agency

No two debts are the same. That’s why credit counseling agencies offer a variety of services and resources to help clients manage their debts. 

Here are some examples of how credit counseling services, like those you’d find through credit union financial counseling, can help: 

These are just some ways credit counseling agencies can help you regain control of your finances. In addition, many credit counselors can also offer insight into whether you might want to declare bankruptcy, take out a loan, or enroll in a debt management plan. 

What is a Debt Management Plan?

A debt management plan is a debt repayment plan set up by a credit counseling agency. How can debt relief services help? They allow clients to consolidate debt under a lower interest rate and make affordable monthly payments to pay it off. 

Unlike other methods of paying debt, debt management plans don’t require taking out another loan or having a good credit score. However, many creditors instruct participants to close all of their credit cards during the program to prevent taking on additional debt. 

On average, debt management plans take three to five years to complete, although the length can vary depending on your unique financial situation. 

Benefits of debt management plans include: 

For many, debt management plans are efficient and streamlined ways of paying off debts. 

What to Look for in a Credit Counseling Agency

When choosing a credit counseling agency, look for an organization that offers a variety of services, meets certification criteria, and delivers personalized assistance. 

Here are a few factors to consider: 

Remember, while credit counselors are there to help, you will also have to put in the work to understand your finances and budget better. There may be a difference in skill level between the breaststroke and a doggy paddle, but ultimately both will get you across the water. So pick an organization you can picture yourself working with on your terms and at your pace.

Benefits and Risks of Debt Settlement

While debt management plans work to consolidate debt into easy payments, debt settlements seek to lower your debt through the power of negotiation. Rather than creating a plan to pay off your entire debt, your agent works to strike a deal with a creditor to reduce the balance to a percentage of what you owe. 

While debt settlement can be a valid option, it has its share of benefits and risks. 


Benefits of debt settlement

The benefits include: 


Risks of debt settlement

The risks may include: 

Further Resources on Credit Counseling and Debt Relief Services

Here are some additional resources to get you through the journey to becoming debt free: 

Navigate Rough Financial Currents with a Credit Union

While financial difficulties can have you feeling like you’re being pulled under, your local credit union can help you stay afloat. Use our Credit Union Locator tool to discover credit union credit counseling services near you. From budgeting workshops to one-on-one support, you’ll find the right tools and guidance to help you reach the sunny shores of financial freedom. 

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Did You Know?

Did you know that credit unions go beyond banking, offering a range of financial advising services like credit counseling? With their not-for-profit, member-oriented approach, you’ll get the personalized service often missing from the for-profit bank experience. 

Find the right Credit Union for you

There are more than 5000 credit unions to choose from across the U.S.