Credit counseling is a service that a person can seek to manage his debts. It can be an alternative to bankruptcy.
There are many things that a legitimate credit counseling service can do for someone facing difficulty in paying off his debts.
First, a credit counseling can provide education and be a guide to better finance management. The legitimate credit counseling services offer advice to the consumer about handling and managing credit.
Secondly, a credit counseling agency also provides help with planning a budget for the consumer. Sometimes all that a consumer needs in order to pay off his debts is a carefully made and well devised financial plan. A credit counseling service does this by examining the financial details of the consumer. A consumer provides all details of his income, expenses and financial liabilities to the credit counseling service. The credit counselor then compares the income to the debt and comes out with a budgeted financial plan that allows the consumer to utilize his income better in paying off his debts while continuing to leave enough resources for his monthly expenditures.
Thirdly, a credit counseling agency can also negotiate with the creditors on the behalf of the consumer. Technically, a credit counseling agency cannot do anything that the consumer cannot so himself. However, as they are a professional outfit, they are likely to have more experience in negotiating which means that they might be able to negotiate better terms and conditions for a consumer than he could himself. Many people enjoy the convenience of letting someone professional handle the negotiations. In order to do this a credit counseling service may enroll you in a Debt Management Plan. Under this service they will negotiate with all your creditors and try to get you better terms of repayment. You will be required to make a single consolidated payment to the credit counseling service every month that they will disburse to your creditors.