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Debt and choosing a credit counselor

Money & Debt

This article, excerpted from material by the Federal Trade Commission, provides resources and information about debt and credit counseling.

Choosing a credit counseling organization

Credit counseling organizations can:

  • advise you on managing your money and debts,
  • help you develop a budget, and
  • offer free educational materials and workshops.

Counselors are certified and trained in consumer credit, money and debt management, and budgeting. They discuss your financial situation with you, and help you plan to deal with your money problems.

Check credit counselors's reputations through state attorney general offices and consumer protection agencies. The United States Trustee Program also lists credit counseling agencies that can provide pre-bankruptcy counseling. 

Read more here: Choosing a Credit Counselor at

Debt management plans and how they work

If your financial problems stem from too much debt or an inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). 

In a DMP, you deposit money monthly with the credit counseling organization. It uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. 

Learn about management plans from the FTC. See Choosing a Credit Counselor.

Credit counselors must tell you about their fees

Under the FTC's Telemarketing Sales Rule, credit counseling and debt relief companies must explain their fees and conditions before you sign up. And, companies that sell debt relief services by phone can't charge fees before settling or reducing your debt. Learn more by reading Choosing a Credit Counselor at