When people are in financial trouble, they often seek the help of a professional. Credit counseling services are professionals who often provide this help. They offer very comprehensive services and can help get you out of debt.

What is credit counseling?

Credit counseling services are companies that help consumers with debt problems. They were originally invented by credit card companies. Credit card companies were worried about the amount of money they had to write off every year in uncollected debt, so they attempted to create a way to help people who were in trouble with debt. Many credit counseling agencies are registered as non profit.

What types of debt are covered?

Credit counseling services can help you with unsecured debt such as credit cards and car loans (after they have been repossessed). They can also help with default bank loans, legal bills, and medical bills. They can not help with secured debt, such as mortgages, tax debt, student loans, or utility bills.

What do they do?

These companies call credit card companies and other companies that their clients owe money to and negotiate payment schedules and sometimes even reduction in payments. The client pays them and they pay the credit companies, therefore minimizing the relationship between the client and the collectors.

Do they help?

It depends. If a person seriously follows a credit counseling services advice, closes out all of their credit cards, and really focuses on paying down their debts, then these services can help. However, if they just pay it off and leave the cards open, the temptation is there to use the cards again. If a person is going to seek this sort of help it is important that they are ready to make a commitment to changing their spending habits for the long term, not just for a few years until their debt is cleared up.