Credit Counseling Services

There are a number of ways to look for debt relief. These include debt consolidation, debt settlement, bankruptcy, and credit counseling. Each one had positives and negatives and the most important consideration is which one will work the best for you.

If you'd rather speak to a debt specialist right away, get a free consultation today!


What is Consumer Credit Counseling?


Credit counseling can be through for profit debt relief companies or nonprofit credit counseling agencies. We at Pacific Debt Relief recommend choosing a nonprofit credit counseling agency.


During credit counseling, you will meet with trained credit counselors who will help you to learn more about financial management and improve your financial situation.

Debt Counseling Company

A Brief History on Credit Counseling

Credit counseling began in the 1960s as a response to an explosion in bankruptcy filings. Credit card companies and banks worked together to develop the National Foundation for Credit Counseling (NFCC). 


Today, the National Foundation for Credit Counseling is a collection of the United States' largest nonprofit credit counseling agencies. View the NFCC reviews listed on their website.


There are also for-profit consumer credit counselors who are not part of the NFCC. Because credit counseling involves money, there are many scams.


Nonprofit vs. For-Profit Credit Counseling


The biggest difference between nonprofit credit counselors and for profit debt relief counselors is in the fee structure. Nonprofit credit counseling agencies generally do not charge fees or assess very minimal charges. For profit debt relief come with fees.


Issues with Credit Counseling Agencies


Nonprofit credit counseling agencies have some issues as well. Many have close ties to the credit industry and work a bit too closely with them and not represent the clients as well as they should.


It is very important to look for a nonprofit credit counseling agency with a good track records of serving clients over corporations.


Credit Counseling Options


During credit counseling, you come up with one or more plans to help you pay off debt and move forward debt free. The goal of credit counseling should be an understanding of finances, improvement of financial situation and better financial habits.


NFCC nonprofit credit counselors will include the following services:

  • Debt management plans - these include working with creditors to roll all debt into one convenient monthly payment which is then parceled out among the creditors
  • Student loan counseling - ways to pays off or apply for federal relief
  • Financial coaching for small business owners
  • Credit report reviews - understanding and correcting credit reports and credit scores
  • Homeownership counseling
  • Reverse mortgage counseling - a mandatory part of the application process typically completed filing an application for a reverse mortgage
  • Foreclosure prevention - avoiding losing a home
  • Bankruptcy counseling
  • Budgeting
  • Other financial education

Look for the services that fit your needs and use the agency that offers them.


What Nonprofit Credit Counseling Can Do


When you work with a credit counselor, you get help with the following situations common to people in debt. These include:

  • Eliminate late fees and over limit charges
  • Stop collection calls
  • Lower your interest rates
  • Consolidate bills into a single monthly payment
  • Pay off debt fast
  • Improves money habits

Since everyone is different, you should have a plan that is tailored to you.


What Happens During a Nonprofit Credit Counseling Session


Most sessions last between 30 minutes and an hour. A credit counselor will ask a lot of questions including

  • Your income
  • How much debt you have
  • Whether you have a budget
  • How often you pay bills on time versus paying late
  • Your credit score

The more information you can provide, the better the counselor can understand your situation and help with your financial problems. They may recommend a debt management program or even debt consolidation or debt settlement.


It can be very hard to lay out your entire financial situation for a stranger but it is very important that you be transparent. Keep in mind, your nonprofit credit counselor has probably seen worse and is there to help you.


Regardless of what happens, you need to follow through with the plan and check in with your counselor periodically.

What Is a Debt Management Plan?


One of the most common methods that consumer credit counselors use is a debt management plan (DMP).


During a debt management plan, you lay out all the information about your outstanding debt. The counselors then contact the companies to get interest rates and/or fee waived. You may a single lump sum payment to the credit counseling agency each month. They then distribute the payment to the different creditors. This can be very effective with credit card debt.


This has the benefit of reducing late fees and charges, lowers interest rates, stops collection calls, and limits payments to a single monthly payment. There is no personal loan needed or any settlement of debt.


Is Credit Counseling Right for You?


Credit counseling can be perfect for someone who is just beginning to get into debt but need some help on budgeting.


They can also be very useful to understanding credit scores and improving them for a future big purchase.


If you are truly struggling and are considering bankruptcy, a credit counseling agency is probably not your best option.


If you'd like a free consultation, give one of Pacific Debt Relief's credit counselors a call. We will help you decide if credit counseling, debt settlement, or debt consolidation is best for you.


If you'd like to find out exactly how much you are paying in loan interest and principal, visit our credit card interest rate calculator.


If you would like more information on Credit Counseling, contact one of our debt experts for a FREE consultation.


See how much money you can save from our debt relief program.


A Better Get Out of Debt Alternative is Debt Settlement


Debt settlement offers a different perspective on helping debtors get out of debt. Debt settlement companies do not have sweetheart relationships with or subsidies from creditors. A debt settlement company's goal is to substantially reduce the indebtedness of its clients, not to merely extend their current debt payments over a longer period. In other words, the negotiations between a debt settlement company and a creditor are real, not a sham.


When you enroll with a debt settlement company you are making the conscious decision to withhold payments from your creditors in order to secure more favorable terms via the debt settlement process. Mortgages and car loans are not part of the process. Unsecured debt like medical debt and credit card debt is included.


For debt settlement to work, you stop paying credit card companies and other creditors. Instead, the debtor deposits program payments into a 3rd party escrow account at a financial institution and allows the balance build up. This may come with some damage to your credit rating, but this can be fixed with on time payments.


The debt settlement company then approaches each creditor and offers a settlement for less than the full balance. Sometimes this is a via lump-sum payment and sometimes the settlement is paid in installments.

In this way, the debtor gets out of debt with a program payment that is affordable. The tradeoff is that consumer's credit will be impacted in the near term due primarily to falling behind on their accounts prior to settlement.


Consumers must decide which course of action is best for them. For those who wish to end their debt quickly, Pacific Debt's program offers unique advantages over debt management plans and filing for bankruptcy.


Pacific Debt Relief


Pacific Debt Relief is a nationwide debt settlement company located in San Diego, California. We specialize in debt settlement and work with unsecured debt like credit card bills, medical bills, personal loans and other consumer debt.


We charge low monthly fees once companies begin to negotiate over your debt. You may see a temporary decrease in your credit score, but it will recover as you improve your financial. Click here for a FREE consultation today!

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