(Franklin Debt Relief offers a debt settlement program to consumers and is not a credit counseling agency.  The information presented below is for educational purposes, so that consumers can make a more educated decision on whether debt settlement, the service offered by FDR, or credit counseling, the option described below, is a better debt relief solution for their situation).  

Consumers find themselves considering credit counseling as a debt relief solution when paying their bills becomes difficult or high interest rates make paying according to the terms stipulated by the credit card companies financially imprudent. Not only do credit counselors offer debt management programs for cash strapped consumers, but many non-profit debt relief organizations also offer budgeting advice and educational resources.

Seeking non-profit debt relief help makes sense for consumers who have already tried negotiating interest rates with their creditors and failed, owe primarily credit card debt or unsecured personal loans, are having difficulty managing their monthly expenses, and do not have better options readily available. (Two options one should consider before seeking the services of a credit counselor are debt settlement or a debt consolidation loan)

Once a consumer determines that credit counseling is the appropriate debt relief option, the following is a list of steps that one should anticipate:

1. The credit counseling agency will begin by totaling your total monthly expenses against your total monthly income. If much of your expenses are superfluous or can be easily reduced by prudent budgeting, a reputable non-profit debt relief organization will encourage a consumer to explore educational resources to correct their debt problem. If the credit counselor determines, however, that the debt problem is unmanageable or uncorrectable by modifying one’s spending habits, he or she will direct the consumer to enroll in a debt management plan.

2. The credit counselor will give a monthly quote to the consumer based on the creditors owed and the respective balances. Assuming the consumer agrees to enroll in the debt relief program offered, they will be instructed to close all their credit card accounts.

3. The credit counseling agency will contact each creditor and submit a written proposal asking for a specific interest rate reduction. The credit card company will either accept or reject the proposal. If the proposal is rejected, the credit counselor will submit another offer. (Keep in mind, the credit card companies are not obligated to accept an interest rate reduction offer.)

4. The consumer will begin making one monthly payment to the credit counseling agency, who will in turn distribute these payments to each creditor. This monthly payment will include all of the credit counselor’s fees.

5. This process continues for 4 to 5 years until all of the debt is paid in full, assuming the plan is completed.