If you have not been able to create a workable budget and stick to it, cannot work out a payment plan on your own with your creditors, or cannot keep track of bills that continuously stack up, credit counseling may help. Credit counseling may also help if you are opposed to the idea of taking another loan or line of credit to get out of debt, or if your credit is prohibiting you from getting a loan. Credit counseling agencies do not place loans for consumers. Instead they offer programs, through which, they will work with you to establish a repayment plan that is agreeable to both you and your creditors. In most cases, credit Counseling agencies can only obtain more favorable repayment terms on unsecured debts such as credit cards, collection debts, medical bills and unsecured loans. They are most successful at helping you with credit card debt and they require that you stop using your line(s) of credit.

Most credit counseling agencies offer budgeting assistance and budgeting tips that often prove very useful for troubled debtors. They often act as the helpful partner that a consumer needs to help them stay on the road to becoming debt free. A credit counseling agency will negotiate with your creditors in an attempt to get them to reduce your interest rates and reduce monthly expenditures. They often request voluntary contributions to help offset the costs of providing the repayment service for debtors. You will receive the same services even if you decline to make a donation. Counseling agencies are often successful in getting credit card and loan companies to stop charging costly penalty fees such as late and over-limit fees. For debtors who are behind on their obligations, they can often arrange with some creditors to have their accounts re-aged or brought back to a current status as they are reported on a credit report. However, this does not mean that the agency will "erase" marks that are pre-existing on a debtor's credit report. The criteria for bringing the accounts current, differs from creditor to creditor. Debt management plans can be very effective in eliminating the stress that is caused by creditors and they assist in establishing a consistent payment pattern, which may help a consumer who is at risk of being sued by his creditors. Credit Counselors are often trained to advise debtors of their rights under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. After assisting you with your budget, they will send proposals to your creditors as a means of getting your creditors to accept the new, more favorable, repayment terms.