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Typically people seek credit counseling when they are unable to manage the credit they have taken from credit card companies. There are several non-profit organizations in the business of credit counseling. Their primary objective is to help consumers get out of debt and regain their financial stability.
Typically the first session is free and the counselors create a plan that assesses the financial situation of the client, develops a reasonable spending plan, sets financial goals and then helps put these into action. Counselors can advise people that simply cannot get out of debt with their current income and therefore must declare bankruptcy. Sometimes, they will know of options that the average person in debt does not, and use it to their advantage.
Most of the counseling is done over the phone but the client is required to fill out worksheets and provide tax returns so that the counselor can get a clear picture of their financial resources. Once a debt to income ratio is created, the counselor is better able to determine the best way to continue servicing the debt until it's paid off.
Many Web sites offer consumers self-help tools and calculators so that they can get the same information on their own. However, making such a plan requires skills that many consumers do not have and therefore counselors are can be an extraordinary amount of help when creating a debt management plan.
In addition to providing planning assistance, many counseling services can help consumers consolidate their debt by leveraging their relationship with credit card companies and banks. When such negotiation takes place the counseling agency takes an active role in continued debt resolution with follow-up sessions and in some cases, becoming a payment intermediary.
It is mandatory under the legal guidelines, that an agency follows AICCCA (Association of Independent Consumer Credit Counseling Agencies) standards to make sure that the customer gets the best quality of service. The agencies are typically non-profit organization with licenses and certified counselors working for them.