Can I Trust the Credit Counseling Agencies?

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#AskanExpert: Question for Erica Sandberg of

Dear Erica,

I remember hearing that most of the credit counseling agencies were in cahoots with the credit card companies, and did not have the consumer’s best interest at heart. Due to health problems, I’ve not been working for way too long and am in a huge amount of debt. I’m at the point where I need to figure out if it’s best for me to declare bankruptcy, or to see about having the credit card companies take far less from me than I owe. I haven’t missed any payments or paid anything late, so I am in good standing in that way. I have long hoped that I would be able to pay all this back, but at this point it’s looking like I’m just bailing water out of a sinking ship.
Do you happen to know how I figure out what to do and how to go about it? Is there some sort of free (and reputable) debt services agency that I could contact?-Justine

Hi Justine,

“Cahoots” is such a great word. But it’s also negative and not necessarily correct when applied to the subject of credit counseling agencies. “Connected” would be more accurate.
These organizations exist for one basic purpose: so that overburdened, financially stressed individuals can discover ways to deal with their debts and manage their money more effectively. That’s not a public relations statement, it’s the truth. That said, however, credit card issuers and other lenders tend to like them because they can help cardholders pay their delinquent accounts. In turn, some creditors have agreed to contribute funds to the agencies so they can continue to do their work. The relationship, therefore, is symbiotic.
A nonprofit credit counseling agency that is a member of the National Foundation for Credit Counseling is the way to go. As part of the accreditation process, agencies must provide objective advice to their clients. Visit their website or call 800-388-2227 to find an office near you. Most sessions are done over the phone but if you prefer to meet face-to-face that is available too. Appointments are free, so you won’t have to dig into your savings (or go deeper into debt) to pay for the service.
You actually have nothing to lose by checking them out. All that will happen during the one-hour session is an exchange of information. You tell the counselor what’s going on and what you want. Then the counselor looks at all of your financial information and tries to help you achieve your goals, based on the reality of your circumstances. A debt repayment program may be introduced as a way to pay down your balances, but that’s only if you can afford the payments.
And that brings me to your real problem, your lack of income. If you aren’t working, how are you going to pay those you owe? Somehow you’ve managed to keep your economic boat afloat, but I sense major holes beginning to form. You need to set sensible priorities. A credit counselor will assist you with this, but you can also do so on your own by:

  1. Writing down the amount of money you receive on a monthly basis.
  2. Listing all of your necessary expenses. That should include housing, grocery, and transportation costs.
  3. Subtracting line two from line three.
  4. Applying a fixed amount to your creditors, if there is anything left over, until your debts are paid down.

In the event that there is nothing left over, you’ve got to explore other options. Yes, that may include bankruptcy. Once again, a credit counselor can guide you to the right decision. They are trained to discuss this type of legal process so you understand how it may or may not benefit you.
You need help, Justine. Do not look for ways to avoid it. It’s time to talk to a professional.
Erica Sandberg is editor at large for Bankrate’s Credit Card Guide, columnist and features reporter for, and the consumer protection spokeswoman for Western Union. She is a contributing personal finance writer for the San Francisco Chronicle’s online edition, and author of Expecting Money: The Essential Financial Plan for New and Growing Families. Prior to her work as a national money and credit expert and journalist, Erica was affiliated with Consumer Credit Counseling Service of San Francisco for 10 years.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.
updated: 4/18/19