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Credit Counseling Services

By Jackson Roberts

Anyone who has been paying attention to reports from the financial media has likely heard that there has been a dramatic change in consumer spending during the past few years. During the housing boom, virtually anyone was able to qualify for loans and credit and Americans had a ravenous appetite for them. But ever since the economy started to fall apart and the recession took shape, consumers have devoted their discretionary funds to savings and to paying down the debt that they acquired. The latter prospect is an overwhelming task for far too many due to their high balances and interest rates, not to mention the pervasive reality of stagnant or shrinking incomes.

As much as has been made of the problem of homeowners being “upside down” on their homes’ values, perhaps a comparable problem is the unsecured debt (mostly credit cards and personal loans) that currently plagues millions of borrowers. Interest rates of 29.99% are not uncommon on credit card accounts, and the total monthly payments on these accounts can actually surpass their mortgage payment for some homeowners. “Predatory” lending rates seldom exceeded the 10% mark on first mortgages, just to add some perspective to the 29.99% interest rate charged on the credit cards.

Millions of consumers are now searching for answers to their unsecured debt predicaments. Too many of them are only able to make the minimum monthly payment on their debt, which consigns them to extremely long repayment terms. The solution for many borrowers in financial hardship may be credit counseling and a debt management plan (DMP) with its wide array of benefits.

Besides the actual financial counseling, which can be invaluable for some, credit counseling’s principal benefit is that through the DMP, it can lower the excessive interest rates being charged on the unsecured debt. In fact, some creditors may drastically reduce or even eliminate interest rate charges. This allows repayment terms to be shortened to just 3 to 5 years.

Another benefit of DMP’s is that late and over-limit fees become a thing of the past. This undoubtedly contributes to the abbreviated repayment terms as well. Accounts are also re-aged to “current” status by the creditors for credit reporting purposes.

For consumers who are overwhelmed by the organization skills required for the multiple accounts they have, they will appreciate the consolidated monthly payment that a DMP offers. It can become a very tedious task to stay abreast of all the separate payments and due dates with all the other demands that life can throw at us. So making just a single monthly payment will be a welcome change for many.

A DMP will also address the problem with collection phone calls that consumers who are behind on their bills are subjected to. The companies offering DMP’s maintain good working relationships with creditors and can be a big help with these calls. Late payments are not acceptable while in a DMP, so expect this benefit to continue only if you stay with the program and make the agreed payments on time.

The final benefit that consumers can expect from a DMP is that their credit score will not be damaged. The Fair Isaac Corporation (FICO) states that enrollment in a DMP is not a factor that affects a credit score. The fact that a consumer is paying some of their accounts through a DMP will however be noted on their credit report.

Jackson Roberts regularly writes about debt relief solutions. He is also a professional debt relief counselor with over 12 years experience.

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Article Citation
MLA Style Citation:
Roberts, Jackson "Credit Counseling Services." Credit Counseling Services. 21 Aug. 2010. 5 Aug 2014 <>.

APA Style Citation:
Roberts, J (2010, August 21). Credit Counseling Services. Retrieved August 5, 2014, from

Chicago Style Citation:
Roberts, Jackson "Credit Counseling Services"

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