If you’re getting multiple credit card bills every month and you’re overwhelmed or falling behind, you may have considered consolidating (via a balance transfer or a loan or declaring bankruptcy). (Or just ignoring it. Which we don’t recommend.) If you can’t see the light at the end of the debt tunnel, a credit counselor might be able to help you get your debt repayment on track. Here’s how that works.

This is for you: If you’re juggling multiple credit card payments (or medical payments or whatever) every month, and you’d like someone to help you figure out how to do it, or you’d rather make one payment on one large balance.

This isn’t for you: If you aren’t ready to make serious changes to your spending habits (which may be necessary to pay down the debt), or if there simply isn’t enough money in your budget to pay for necessary expenses and handle debt minimums. But a credit counselor can steer you in the right direction.

Hands-on time: A few hours to gather your info and meet with (or speak with) a credit counselor. (An hour or two more if you opt for a debt management plan.) Total time: Up to a month to put a debt management plan in place, if that’s what you decide to do. You also may desire or require additional counseling sessions, so total time varies.

Cost: $0 for the majority of credit counseling agencies who are members of the National Foundation for Credit Counseling (NFCC), and usually $20 or less for those who do charge. (Although if you can’t pay it, you can request that the fee be waived.) If you sign up for a debt management plan, you’ll pay an average setup fee of about $30 and an average monthly maintenance fee of $20 or less.

What you’ll need:

• Your most recent credit card statements, medical statements (or other billing statements) as well as collection letters and other correspondence associated with them


• Information on income and major expenses—rent, mortgage, utilities, childcare, loan payments, etc.


• Information on your basic spending each month on variable expenses—food, entertainment, nonessential purchases


• An Internet-connected computer or a phone

What to do:
1. Visit the NFCC website and click on “Find a Counselor.” (Or call 1-800-388-2227.)

2. Determine whether you want to seek counseling online, over the phone, or in person.

3. Follow the prompts to locate a counselor who’s nearby or can counsel you over the phone or via Internet. (Counseling via smoke signal isn’t an option.)

4. Credit counselors can offer (among other things) two services:

• They can counsel you. (Of course.) They can talk to you about your income, debts and expenses and help you figure out where to cut costs and how to get back on track. For this service, most don’t charge a fee. (Some do, but it’s nominal.)


• They can set up a debt management plan (DMP). On this plan, they can negotiate with your creditors for a lower monthly payment, a lower interest rate, and to have all late fees and over-the-limit fees stopped. Once that’s done, you’d create a plan to get yourself out of debt (average time to debt-free-ness: three years, although you can do it faster if you have the resources). That plan typically involves sending one monthly payment to your credit counseling agency, which will then distribute that money to your creditors, based on the agreed-upon terms.

5. Note: The above steps are NOT debt settlement, which tends to involve getting your creditors to agree to take, say, $5,000 instead of the $10,000 you owe them, and which subsequently trashes your credit. You will pay 100 percent of your debt off by following these steps. You'll just use a credit counselor to do it.

6. If your chat with a credit counselor reveals that even on a DMP and after cutting expenses to the bone, you simply don’t have enough income to pay down your debts, you may need to discuss debt settlement and/or bankruptcy. Neither is a fantastic option, and both will ding your credit for years. Talk carefully through your options before jumping on either train.

7. If you enroll in credit counseling or a debt management plan, neither should ding your credit score, but both could be noted on your credit report. That means that lenders will see it, and if you’re applying for something in the future, it could make you look like more of a credit risk. (Although, for the record, not paying your bills at all will make you appear even riskier)

8. Put your plan into action, whether it’s merely budgeting advice from the credit counselor or an actual debt management plan. Make payments on time and watch your spending. And for heaven’s sake, put the credit cards away.

9. Become debt free.

10. Celebrate.

To learn more:
How Do I Know if I’m in Financial Trouble? (NFCC)
Guidelines for Selecting the Right Credit Counselor (NFCC)

Did you do it? Tell us what worked or share other tips in the comments below.

Who helped: Gail Cunningham, National Foundation for Credit Counseling


Related Links:

How to consolidate your credit card debt onto one card

See all our Do One Thing articles

Should you seek credit counseling?