Archive for credit counselling

What Exactly is Consumer Credit Counseling?

There are many different meanings for the term consumer credit counseling.

In it’s simplest form, credit counselling is the process where you meet with a credit counselor and they give you advice on managing your money. They will help you deal with credit card debt, and they will explain how to improve your credit score on your credit report.

In addition, if you are planning to file for personal bankruptcy in the United States, they will conduct the mandatory credit counseling before filing bankruptcy, and the post bankruptcy filing credit counseling session. In Canada, the credit counsellor will conduct the credit counselling during the bankruptcy process.

Finally, a credit counselor will actually negotiate with your creditors on your behalf through a Debt Management Program where you make one payment each month to deal with your debts.

For more information, consult a local credit counselor.


What’s the difference between credit counseling and a Debt Management Plan?

Consumer credit counseling refers to advice you get from a credit counselor to help you deal with your debts. Your credit counselor may advise you to get a debt consolidation loan, or they may help you with budgeting to pay off your debts on your own.

If you required more help, they may recommend a Debt Management Program where you make one payment each month to deal with your debts.

In a debt management plan the credit counsellor negotiates the settlement on your behalf, and your debts are repaid over a period of time. In other words, a debt management plan is one of the services provided by a credit counselor on your behalf.


Credit Counselors Offer Advice to Avoid Debt This Christmas

The editors of have completed a survey of credit counselors, and we have compiled their top tips for avoiding debt this Christmas:

  • Before you go to the mall, make a list of who you are buying for, and what you will spend and stick to it. Impulse buying is the number one cause of excessive spending at Christmas.
  • Put some effort into your gifts. By thinking ahead, you may find that homemade gifts, pictures, or crafts are the best gifts, and often the least expensive.
  • Leave your credit cards at home. People who use credit cards spend more than people who pay by cash or debit card, because credit cards don’t feel like real money.
  • Don’t forget to include in your budget the extras, like gift wrap, shipping, and cards. As a bonus tip, stock up on all of these items after the holidays to save money next year.
  • Shop early. Waiting until the last minute makes it very hard to plan ahead.
  • Shop on the internet. Many web sites allow you to comparison shop, and they are a great source of ideas.
  • Consider a gift pool with your relatives. Instead of buying for everyone, put everyone’s name into a hat, and just buy one gift for the person you get.

The holidays are supposed to be fun, so plan early, and make the holiday season enjoyable for all.


What’s the difference between credit counseling and debt consolidation?

This is a very common question, because a credit counseling Debt Management Program may appear to be very similar to debt consolidation. In both cases you have more debt than you can handle, so you enter into a program where you make a monthly payment to repay your debts.

In debt consolidation, you get a loan to repay all of your debts. You now have one monthly payment.

f you enter into a Debt Management Plan, your credit counselor works out payment arrangements with your creditors, and you make one monthly payment to your credit counselor, who then distributes the money to your creditors.

In both cases you make one monthly payment to deal with your debts. There are however two significant differences.

First, you must qualify for a debt consolidation loan based on your income and your credit. You may be required to provide outside security, such as a car or a house, to get the loan. The debt consolidator then lends you the money to repay your debts. With credit counseling there is no credit qualification; it is up to the creditors to accept or reject your plan. You do not need to provide any outside security.

The other significant difference is that you will be paying interest on your debt consolidation loan at the going rate, which may be very high if you have less than perfect credit. With credit counseling, you are paying a reduced interest rate. In many cases there is no interest if you make your payments as agreed.

If you have more debt than you can handle, investigate both debt consolidation loans and credit counseling, and then decide which option is best for you.



Do they have credit counseling in other countries?

Yes, consumer credit counseling exists in many other countries.
In the United Kingdom they call it debt counselling, which is actually a good name for it, because that’s really what is happening.  You are receiving counseling to help you deal with your debts.
In Canada, they call it credit counselling, and they spell “counseling” with two l’s, just like they do in England.  In Canada, if you file for personal bankruptcy, you are required to attend two credit counselling sessions in order for your bankruptcy to end and to receive a discharge from your debts.
As personal debt levels continue to increase, it is likely that credit counseling will become increasingly popular in an increasing number of countries.


Welcome to the Credit Counseling Blog

Welcome to the Credit Counseling Blog, where we will discuss credit counseling, debt manage plans, and ways to deal with your debt, all from a consumer’s viewpoint.  Stay tuned for more!