How Does Credit Counseling Work?

Debt counselors can help consumers avoid bankrupty by consolidating debt or negotiating interest rates to reduce payment amounts.

How Does Credit Counseling Work?
Credit Counseling Basics
Credit counseling helps people who have allowed credit card debt to become unmanageable to deal with the debt and learn how to budget and manage money. It can help you get out of debt and rebuild your credit faster than other alternatives, such as bankruptcy. It does not require you to eliminate all your credit cards; instead, it aims to reduce high interest rates and finance charges. The fee for the service usually is determined by your total amount of debt.
Working with Creditors
Once you've given the credit counselor a true breakdown of all your debt, the counselor contacts your creditors to renegotiate rates and the amount of debt. The counselor also may try to consolidate your debt. It is the counselor's job to get you the best deal possible to reduce your debt and find a way to make it manageable.
Long-Term Goals
The counselor also will look at ways you can reduce your expenses and maintain a reasonable budget every month. This component of the counseling is designed to help you prevent such a debt problem from happening again.
Buzzle - Consumer Credit Counseling