2020 Best Invention

What Is Credit Counseling?

5 minute read Upsolve is a nonprofit tool that helps you file bankruptcy for free. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card. Explore our free tool

In a Nutshell

Credit counseling is not a debt relief solution in itself. Instead, it’s a starting point for people who are looking for the right solution.

Written by the Upsolve Team
Updated February 22, 2022

Credit counseling isn't a debt relief solution, but it’s a starting point for people who are looking for the right solution. A nonprofit credit counseling agency will offer a 45-60 minute free session to help you explore your options. Your credit counselor can explain solutions like debt management plans, debt consolidation, and bankruptcy. Credit counseling agencies also offer more general money management assistance, such as financial education materials and budgeting help.

Working With a Nonprofit Credit Counseling Agency

When you’re looking for help managing money, it’s important to do your homework about the organization you choose to work with. There are many great programs created to help people hoping to regain control of their finances. But the debt solutions industry also has more than its share of bad actors. Some for-profit companies, such as debt settlement providers, may make promises they can’t keep. When you’re under pressure it’s easy to be misled by promises of quick relief or drastically reduced debt. Unfortunately, that can be an expensive mistake. 

Starting with a nonprofit credit counseling agency certified by the National Foundation for Credit Counseling (NFCC) can put you on the right path. The Better Business Bureau is another good source of information about debt counseling organizations and other providers you may be considering. You can also find information about which providers are reputable by checking with a consumer protection agency like the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC) or your state attorney general.

These agencies’ websites often provide information about what to watch out for when you’re seeking debt relief. They may also include lists of organizations that have been sued or press releases about legal action taken against specific companies.

Your options for completing credit counseling will depend on the agency you choose to work with. You may be able to complete your credit counseling session over the phone, online, or in person. During your free session, your credit counselor will gather some basic information from you. For example, they’ll ask about your income, debts, and living expenses. When the credit counselor has the big picture about your income and expenses, they’ll ask about your goals and challenges. 

This piece is very personalized. Some people who visit a credit counselor are focused on solving a specific problem, such as paying off a student loan or large credit card debt. Others are working toward something like buying a home and know they need to make changes to achieve their financial goals. In the same way, people’s challenges differ. 

Some people are struggling with debt because they have more monthly expenses than income. Others may have fallen behind because of a setback, like job loss, a long illness, or a divorce. Understanding the root of the problem will help your credit counselor find solutions for you. It can be hard to talk about your financial problems and how you got into trouble, but you must be honest. Your credit counselor can’t help you unless they have complete and accurate information.

Information Your Credit Counselor Will Need

Everyone's financial issues are slightly different. That means every credit counseling session is also a little different. However, there is some basic information that most credit counselors will ask for during your free session. These items usually include:

  • Paycheck stubs and information about any other source of income you may have, such as child support you receive or retirement income

  • Complete information about all regular household expenses, such as rent, utility bills, and transportation expenses

  • Copies of credit card bills, loan schedules, collection notices, and any other documents showing balances and due dates

  • Information about the status of your debts and any past-due balances, lawsuits, or wage garnishments

To make the most of your credit counseling session, you should organize this information in advance. Make a list of household expenses, and double-check to make sure you aren’t forgetting anything. Make a note if you have any debts you don’t have statements for to make sure you don’t leave anything out when you talk to your credit counselor.

Two Types of Credit Counseling Services

You may have heard of credit counseling as a requirement before filing bankruptcy. Sometimes, the use of the same term to describe bankruptcy counseling confuses people. But, there’s a reason the name is the same. The credit counseling services and the steps the certified credit counselor takes are very similar, often identical.

The purpose of general consumer credit counseling is to explore options and find the best financial solution for you. The purpose of the pre-bankruptcy credit counseling requirement under the U.S. Bankruptcy Code is to make sure you've explored all of your options before determining that bankruptcy is the best option. A small percentage of people who go to credit counseling planning to file bankruptcy find other solutions after speaking with the credit counselor. And, some people who go to credit counseling without a specific solution in mind discover that bankruptcy is their best option.

Upsolve User Experiences

1,917+ Members Online
bryant graham
Bryant Graham
★★★★ 7 days ago
Upsolve was very helpful i highly recommend there service.
Read more Google reviews ⇾
Keith Vincent
Keith Vincent
★★★★★ 7 days ago
Upsolve provides a invaluable service at no cost. The clerk of court told me all of my paperwork was in order. It was done by myself with the assistance of Upsolve staff. Great Service for the people of this country. Thank you Upsolve.
Read more Google reviews ⇾
Andrew Morales
Andrew Morales
★★★★★ 8 days ago
Exceptional Service and Support - A Lifeline During Bankruptcy I am delighted to share my heartfelt gratitude for Upsolve and the exceptional assistance they provided my wife and me during our bankruptcy filing. Their expertise, kindness, and user-friendly platform made an otherwise daunting process remarkably simple and accessible. From the moment we engaged with Upsolve, their team exhibited an unwavering commitment to helping us navigate the complexities of bankruptcy with ease. Their knowledge and professionalism were evident at every step, and they went above and beyond to ensure we felt supported and understood throughout the entire journey. Upsolve's user-friendly platform was a game-changer, simplifying the otherwise overwhelming paperwork involved in bankruptcy filings. Their intuitive interface guided us through each necessary form, reducing confusion and streamlining the process. Thanks to their comprehensive resources and guidance, we were able to complete the filing accurately and efficiently. What truly set Upsolve apart was their empathetic and caring approach. The Upsolve team was always available to address our questions and concerns promptly, providing clear and compassionate explanations that put our minds at ease. Their commitment to accessibility is commendable, particularly for individuals like us who couldn't afford the services of a lawyer. Upsolve made bankruptcy filing a viable option for those facing financial hardships, providing much-needed support to those who need it most. While we have just completed the filing process and await the final outcome, we are confident that Upsolve's expertise and meticulous assistance will yield positive results. However, regardless of the outcome, we are eternally grateful for their invaluable help. They have given us hope and a fresh start, empowering us to take control of our financial future. If you find yourself in a similar situation, I wholeheartedly recommend Upsolve. Their commitment to making the bankruptcy process more accessible, their exceptional support, and their user-friendly platform make them an unparalleled resource for anyone in need. Thank you, Upsolve, for being our guiding light during this challenging time.
Read more Google reviews ⇾

Debt Relief Solutions

Of course, the best solution will vary depending on your goals and your specific financial difficulties. Your credit counselor may recommend that you consider a debt management plan or that you speak with a bankruptcy attorney. If your financial problems aren’t too serious, the credit counselor may not recommend a program or a solution like bankruptcy. Instead, they provide you with educational materials and strategies for tightening up your budget and regaining control of your debt.

Whatever your specific goals and challenges are, one thing stays the same. Your credit counselor will work with you to create an action plan. In other words, credit counseling isn't just about educating yourself. You will leave your session with clear next steps. Your credit counselor may also review your credit report, and can tell you how each of the possible solutions may affect your credit score.

What Is a Debt Management Plan?

Some of the solutions discussed in your credit counseling session may be steps you can take on your own. Some examples include creating and sticking to a budget or increasing household income. Others, like debt consolidation loans and bankruptcy, may mean getting help from someone other than the credit counseling agency. But, the credit counseling organization itself may offer you a debt management plan (DMP). 

A debt management plan is generally used to resolve debts like personal loans and credit card balances. Some other types of unsecured debt, like medical bills, may also be included if the creditor agrees. Student loans can’t be included.

When you enter a debt management program, the credit counseling agency will try to get you a better deal. They’ll ask creditors to lower your payments and give you better interest rates. Instead of making separate payments to different creditors at different times of the month, you’ll make one monthly payment to the debt management plan administrator. This payment may include a small monthly fee for the credit counseling agency’s services. 

A debt management plan doesn’t reduce the amount of debt. Rather, it is a debt repayment plan providing better terms, so you have lower monthly payments and spend less on interest and late fees.

While creditors like credit card companies will usually close accounts included in a debt management plan, some types of consumer credit may still be available. For example, some people who are making payments through a debt management plan find that they can get auto loans.

Finding the Best Debt Relief Solution for You

The most effective financial counseling is personalized. There is no one-size-fits-all solution to financial problems. A reputable provider will review your information, listen to your concerns, and work with you to find a solution that is workable for you. Nonprofit credit counseling agencies don’t charge for the initial session. So, you have nothing to lose by speaking with a counselor. The more you know, the better your chances of finding the right path to a debt-free life.

Upsolve Helps People Conquer Debt

Upsolve is a nonprofit organization committed to helping people across the United States get out of debt. The core of our service is offering free help to people who want to file Chapter 7 bankruptcy without an attorney. Our website is rich with information about important issues like who is eligible for Chapter 7 bankruptcy and how the automatic stay can offer you instant relief from debt collectors. But, we know that everyone’s needs are different. You'll also find a lot of information about other options for getting out of debt, along with information to help you determine which type of solution might be best for you

If you’re just beginning to explore your options or are looking for a debt management plan, we can help you connect with a nonprofit credit counseling agency in your area. If you want to file for bankruptcy but don’t qualify for our services or want to learn more about Chapter 13 bankruptcy, you can find a local bankruptcy attorney on our website.

Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

It's easy to get help

Choose one of the options below to get assistance with your bankruptcy:

Free Web App

Take our screener to see if Upsolve is right for you.

Take Screener
11,418 families have filed with Upsolve! ☆

Private Attorney

Get a free bankruptcy evaluation from an independent law firm.

Find Attorney

Learning Center

Research and understand your options with our articles and guides.

Go to Learning Center →

Already an Upsolve user?

Read Support Articles →


    + Show Articles

    Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can't access their basic rights when they can't afford to pay for help. Combining direct services and advocacy, we're fighting this injustice.

    To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.