What is Debt Counseling?

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  • Written By: Garry Crystal
  • Edited By: Niki Foster
  • Last Modified Date: 14 October 2018
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With the advent of the credit card and easy to obtain personal loans, many people find themselves sliding unnoticeably into debt. Many people have an unmanageable amount of debt and find it hard to cope with repayments. The repayments can become worse from week to week, as the debt increases due to interest and charges when a payment is missed.

People who cannot cope with the amount of debt they have can seek help from a debt counseling service. A debt counseling service is a company that advises and works with an individual or family to control and manage accrued debt. The debt counseling service may work for a profit, or they may be a profit-free company.

The main aims of the debt counseling service are to control the debt so that repayments are manageable and, if necessary, to repair the client's credit score. Debt counseling services can offer advice on how to reduce monthly debt bills. One way this can be achieved is by transferring high interest credit cards bills to a zero interest or lower interest card. These cards sometimes offer a low interest fixed rate for an introductory period. Transferring bills this way can save a great deal of money.


If you own your own home, then a debt counseling service may advise obtaining a home equity loan. By doing this, you will be able to secure a low interest loan. This is a good option when trying to reduce your monthly debt bills and lower your overall debt. Personal loans that are not secured usually have a higher interest rate and are usually last resort options when borrowing.

The debt counseling service can also help you establish a long-term debt reduction plan. This plan should be easy to stick to, ensuring that you maintain and properly use debt now and in the future. There is no point for the debt counseling service in helping you clear your debt now if you are only going to slip back and misuse your debt options in the future.

There are many ways to find a reputable debt counseling service. Most communities have their own debt counseling service and can help you avoid disreputable services. There are some debt counseling services that claim to help, but sometimes do more damage to your credit score than good. If in doubt, try to find a non profit service run independently or by the government. You should be able to find details over the Internet.



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