Taking control of your finances is one of the most important steps you can take toward long-term financial wellness. Debt management organizations, also known as credit counseling agencies, are nonprofit organizations that provide free or low-cost services, including credit counseling, financial literacy workshops, and one-on-one guidance to help you reach your financial goals.
Wondering what a credit counseling agency can do for you? Read on to learn more about their services and how they can help.
Credit Counseling
Credit counseling agencies offer non-profit credit counseling and can help you come up with a strategic plan to pay back credit card debt. Through individual sessions, your counselor will review your budget or help you create one, as well as review your debt and long-term goals, while also helping you gain a better grasp on financial literacy. If you need help tackling your debt, a credit counselor can help you come up with that plan.
Debt Management Programs
A debt management program, or DMP, is a plan that you enroll in to get greater help to pay down loans. It allows your counselor to negotiate with your lenders to reduce your interest rate (often as low as 6%–10%) and roll your loans into one affordable monthly payment. The usual timeline on a DMP for repayment is three to five years, giving you a plan and a goal that’s more attainable than before.
Student Loan Counseling
Many nonprofit credit counseling agencies also offer student loan counseling to help you better manage your repayment. Through these sessions, you'll gain a clearer understanding of your options, including the key differences between federal and private loans, income-driven repayment plans, and potential forgiveness programs. Ultimately, your counselor will work with you to build a repayment strategy tailored to your unique financial situation.
Bankruptcy Counseling
Before deciding to declare bankruptcy, speaking with a bankruptcy counselor is a smart first step. They can help you determine whether bankruptcy is truly the right choice for your situation, walk you through your available options, explain the key differences between Chapter 7 and Chapter 13, and equip you with the knowledge and tools you need to rebuild your finances after filing.`
Try the Virtual Counselor Tool
Before reaching out to a counselor, CCCS of Chattanooga offers a free virtual counseling tool that lets you explore your options on your own. Simply enter your debt information to see how much you could potentially save through a debt management plan, making it a helpful first step toward understanding your financial picture before your first appointment.