Debt Counseling Basics

Nobody sets out to amass debt. Too often, it's the result of expenses that are positive and life-changing: A college degree. Medical bills. Dare we mention raising kids? Happily, all it takes is time and resolve to become solvent. Partner with a caring debt counselor and become a wiser consumer while making your way out of that jungle.

Understand Debt Counseling

Not unlike psychological counseling, debt counseling consists of meeting with one or more professionals trained to analyze a consumer’s financial situation and then make recommendations that can include payments and debt consolidation so clients reclaim their fiscal health. Counselors may also help clients set budgets to manage their expenses.

Types of Counselors

There are many levels of professionals in the field of debt counseling. Some are independent contractors with financial backgrounds who are in private practice. Others may work for non-profit organizations, municipal or federal government agencies. The type of service best suited to your needs may come from any of these professionals.

Where to Start

Turn to resources like your municipal government, health and human services organizations, the IRS, universities, military bases, credit unions, housing authorities, bankers and entities like the U.S. Cooperative Extension Service. Use the Internet, but don’t discount friends and family who may have received debt counseling help in the past.

What to Expect

Debt counselors typically help clients assess their total indebtedness to decide what type of long-term financial solutions are required. Some help clients get debt consolidation assistance, negotiate with creditors and/or set up payment plans. Counselors may be able to arrange un-collateralized loans or secure funds backed by client assets (e.g., life insurance or retirement funds). Every situation is unique.

How Much Will This Cost?

This question is of great importance for those in financial binds, so never decide on one debt counseling service until you learn about their fee structure. One agency may have a standard fee schedule while another uses a sliding scale, basing fees on family income. Counseling may be free for some clients, but don’t make this assumption until you know it for fact!

Ask For What You Deserve

Being in serious debt doesn’t give anyone the right to treat you badly or take advantage of you. Once you select a debt counselor, you have every right to ask for credentials attesting to the person’s and/or agency’s legitimacy. Request letters from previous clients, licenses, certifications, accreditations, staff credentials and ask for a written guarantee of privacy.

Debt Counseling Benefits

Debtors with bad financial habits are counseled to understand the circumstances that got them into debt in the first place. Clients learn new behaviors, habits and practices to break the potential cycle of future indebtedness. Debt counseling has significant psychological benefits and can even help repair family issues arising from spending and insolvency stressors.

The Down Side

Be cautious when choosing a debt counselor. Scam artists regularly take advantage of desperate people using clever scams and offers of assistance that are too good to be believed. Protect yourself. If you feel uneasy, don't hesitate to verify a counselor's or agency's credentials with the State’s Attorney, Better Business Bureau and other institutions conducting oversight on individuals and agencies.


Never sign papers for counseling services until you’ve read every word. The Federal Trade Commission regulates debt relief services and maintains stringent transparency guidelines for your protection. Finally, tame your expectations. Attorney Patricia Dzikowski says it’s not uncommon for debtors to spend years getting clean, only to fall back into their old spending habits. Make sure you’re not one of these statistics.

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