Many people decide to use the option of credit counseling, sometimes called debt consolidation. There are many companies, both not-for-profit and for-profit, that provide this service. In theory, this service is simple: the counselor will review your financial situation (income, expenses and debt level) and help you determine a monthly amount of money you can afford to pay your creditors. The counselor will then propose repayment schedules to each of your creditors, follow up, and follow up again. Proposals can take up to 6 months to actually get all of the accounts accepted.

Though counseling services rarely report to the credit bureau, the creditors will often put a statement onto the credit report that says you are using a counseling service - this may harm your credit rating depending upon your situation.

Many agencies tell you that it will take a certain amount of time for your repayment plan to be completed, but what you may not be told is that it all depends upon what your creditors accept as repayment. Creditors hold the cards in this situation - some will drop the interest rates, some won’t, some will accept the counseling plan, and some won’t. Each individual plan is different and yet creditors must be universally satisfied. If not, your repayment plan can take many more months, even years, longer than the agency originally may tell you it will take.

Many agencies charge only a small amount each month as a service charge, but that’s because many of them are actually funded by the major credit card issuers. Yes, this means that counseling agencies say they are working for you, they are actually working for the credit card companies. If your counseling agency is accepting payments from credit card issuers (sometimes called "contributions" or other seemingly innocent terms) then it is likely that they are not working in your best interests.

It is in your best interest to always check up on your credit counseling agency. Get in touch with the Better Business Bureau, make sure the agency is licensed, find out if they accept payments directly from creditors, and get a guarantee of how long it will take you to get your debts paid in full.