Credit counseling or debt management services can help you get out of debt by providing you with a debt management plan to pay off your current debts. Never use a for-profit credit counseling agency.

Non-profit agencies are available that will not only help you get out of bad debts, but which will also help you consolidate your outstanding loans such as auto and student loans.

Your initial contact with a non-profit credit counseling agency will involve a meeting with a credit counselor. He or she will ask you for documentation about your consumer debt and have you fill out an application outlining your personal information.

If you’re approved for the service, the agency you choose will then create a debt management plan that includes an account set up by the agency. You will deposit a certain amount of money each month which they will use to pay off your creditors.

There will be an interest fee, but it should be much lower than the APR on your debts. The service will then contact your debtors and negotiate a payment plan which will hopefully include a lower interest rate and lower payments.

After the payment plan is approved, the agency will begin to pay the debtors on an ongoing basis from the payment you will deposit each month. Credit counseling services can also educate you about debt prevention in the future.

They’ll also work with you after developing a debt relief plan and help you develop a workable budget and counsel you about investing and savings plans. Using a credit counseling service can actually improve your credit rather than hurt it.

You’ll appear as determined to eliminating your debt and getting back on track with the help the credit counseling service provides. Your creditors may decide to re-age your account, meaning that they may forgive late fees incurred before you began the counseling process.

They may also agree not to report late or missed payments to credit bureaus. Non-profit credit counseling agencies can greatly help your decision to pay off and get out of debt. Just beware of credit counseling scams which promise variable-rate loans you can use to pay off debts – then, tack on high rate APRs or demand up-front fees for their services.

A checklist of requirements of reputable credit counseling agencies should include having a BBB (Better Business Bureau) membership, ensuring it’s a non-profit agency and have accreditation and charge minimal fees for their services.

Customer references should be available from the agency you choose and they should also be willing to provide you with periodic reports about the status of your debts. Keep in mind that you, alone, are accountable for your debts, even if the service has agreed to pay them off.