Credit counseling is not for everyone, but may be for you if you are struggling with debt. Credit counselors work by negotiating a reduced payment plan with creditors. In exchange for receiving timely payments, creditors may return a small portion of the amount received to the counseling service. Only consider a counselor if you can reign in your spending and pay off your debt in less than five years.

Like the rest of the credit world, counseling services have good guys and bad guys. MSN offers several ways to identify a bad guy:

• They ask for a high upfront fee: $10 is appropriate. $1,000 is not.
• They lack accreditation: Make sure your counseling service belongs to the National Foundation for Credit Counseling or the Association of the Independent Consumer Credit Counseling Agencies.
• Crazy Promises: Counselors are not magicians. They can help manage debt, not make it disappear. They cannot pull a rabbit out of a pigeon in a hat. That quarter in their hand, the one that came from behind your ear. It’s yours.

— CAREY GREENBERG-BERGER

The Consumers’ Guide to Credit Counseling [MSN Money via AllFinancialMatters]
National Foundation for Credit Counseling
Association of Independent Consumer Credit Counseling Agencies
(Photo: saibotregeel)

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