(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).  

Credit counseling in its earliest form as a debt relief solution dates back to the earliest forms of mass unsecured credit extensions and charge cards in the 1920s. Many of the first formal credit counseling agencies were created with the advent of the National Foundation for Credit Counseling (NFCC) in 1951. The NFCC, much like credit counseling today, was founded with the purpose of helping major department stores and other credit grantors recover delinquent debts, prevent bankruptcy, and encourage financial literacy amongst consumers. In the 1980s and until today, as credit cards became increasing popularity and getting credit became increasingly easier, the credit counseling industry gained an important role in the financial lives of more Americans.

The growing popularity of credit counseling was manifested in 1993 with the creation of the Association of Independent Consumer Credit Counseling Agencies (AICCA). The AICCA was founded as an adversary of the NFCC, which exclusively endorsed face-to-face consultations and a more formal approach to credit counseling. Today most credit counseling agencies offer phone meetings as an option for a consultation, and the largest and most influential trade organization for the credit counseling industry is the American Association of Debt Management Organizations (AADMO).

Beginning in 2002 many credit counseling agencies came under heavier scrutiny as both federal and state regulators started taking aim at the industry as a whole. Much of the attention was devoted to Ameridebt, who was sued by the Attorney Generals of Illinois, Missouri, and Texas, as well as the FTC for misrepresenting the nature of their business. As a result of their large up front and monthly fees, many supposed “non-profit” credit counseling agencies began being investigated by the IRS. Largely in the business of issuing debt management plans instead of promoting financial literacy, many of these companies lost their tax-exempt status.

With the passing of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005, mandatory credit counseling sessions are now mandatory in the 180 day period preceding the official date of filing bankruptcy. Credit counseling promises to be an important outlet for overextended consumers for years to come.