Credit Counseling
Creditor Terms, Not Yours
Credit counseling is a debt management program where you engage a credit counseling agency to negotiate with your creditors on your behalf at an interest rate lower than you are currently being charged. The credit counselors refer to the terms dictated by the creditors to determine the payments or interest reductions that will be offered.
Credit counseling agencies charge clients service fees and also receive compensation from the creditors. These agencies are usually set up by the credit card companies in order to collect as much of the debt as possible. Though they hold non-profit status, their profit beyond operating expenses goes back to the credit card companies.
The goal of credit counseling is to help consumers who are burdened by unsecured debt to pay off their debts in a planned, reasonable amount of time and usually within four to five years.