Credit Counseling

Credit counseling is an education plan where a credit counselor will help find you a debt reduction program that meets your financial needs. Most commonly, credit counselors offer a debt management plan where you enter a repayment plan with your creditors through this centralized plan. You have often heard these plans refered to as debt consolidation, because these programs evolved from a need to give debtors an alternative to both bankruptcy and debt consolidation loans.

Some credit counselors will also offer debt settlement plans. These plans are alternatives for people so far behind in their payments that they can't pay the minimums of a debt management plan. These more severe programs may save you money in the short term, and are often less severe than bankruptcy, but you should ask your credit counselor to explain how these plans affect your credit.