Credit Counseling.
In plain English
Credit counseling is guidance from a trained counselor who reviews your income, spending, and debts and helps you build a plan to handle them. A reputable nonprofit agency offers an initial review for free or low cost and can explain options like budgeting, a debt management plan, or, when needed, bankruptcy. The counselor works for you, not for a lender, and a good one explains tradeoffs instead of pushing one product. Approved nonprofit credit counseling is also a required step before filing for bankruptcy under federal law.
01Why it matters
When debt feels like too much to face, a free session with a reputable counselor gives you a clear picture of your options and a real plan, which can stop you from falling for a high-fee for-profit fix that makes things worse.
02The math, step by step
You feel buried and are not sure whether to consolidate, settle, or file for bankruptcy. You book a free session with a nonprofit credit counseling agency. The counselor reviews your budget, shows that a debt management plan would clear your cards in four years, and explains when bankruptcy would make more sense. To find a reputable agency, you can check the U.S. Department of Justice's list of approved credit counselors.
03What this is NOT
Credit counseling, done right, is education and planning from a nonprofit whose initial review is usually free. A debt settlement company is a for-profit business that charges fees to negotiate down balances and often tells you to stop paying. They are not the same, and confusing them can cost you.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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