The Experience of Debt Counseling: What You Need to Know

Not long ago, I found myself buried in debt, not knowing where to begin in addressing it. I felt uncomfortable asking anyone in my family or social network for help, even though I knew I needed support to view my situation with a clear mind. Eventually, I decided to reach out to a debt counselor for assistance.

We’ve discussed this option on Mytour before, especially highlighting it as a more reliable alternative to shady debt-relief companies that claim they can improve your credit score instantly. However, if you’ve never spoken to a debt counselor (sometimes referred to as a credit counselor), it can be tough to know what to expect. And with your financial situation already weighing on you, the last thing you want is more stress and uncertainty.

To be honest, I don’t remember many details about my own counseling experience—it all seems a bit hazy now. So, I reached out to Katie Bossler. Bossler has been with nonprofit GreenPath Financial Wellness since 2003 and works as a quality assurance specialist, bringing over 12 years of experience as a counselor.

If you’ve never consulted a debt counselor, here's what Bossler says you can expect.

What to Expect in Your First Meeting with a Debt Counselor

The easiest way to find a counselor is by reaching out to the National Foundation for Credit Counseling or using their online intake form. They’ll connect you to a nonprofit counseling service, like GreenPath, for example. You could end up speaking with someone from a nearby organization or one located across the country. If it's local, you may have the option to meet in person, although phone consultations are common too.

Your session should either be very affordable or even free of charge.

The process begins with you explaining your financial situation and your main concerns. 'We take the time to understand each person’s unique financial challenges or even their aspirations,' Bossler shares. She notes that her clients come to her for a wide range of reasons, from dealing with credit card debt to managing student loans to fine-tuning their budgets. 'Our goal is to help them define what they want their financial future to look like and what objectives they want to achieve.'

The Financial Breakdown

With your consent, the counselor will review your credit report to better understand your debt situation. (Rest assured, it’s a 'soft pull,' meaning it won’t affect your credit score.) After verifying the accuracy of your accounts, you’ll share additional details about your income and monthly expenses. This comprehensive view allows the counselor to work with you to develop a financial plan.

If this seems overwhelming, it’s because it often is. 'It’s incredibly difficult to open up to someone over the phone and share the details of your financial life,' Bossler explains; for many of her clients, it’s the first time they’ve openly discussed their financial struggles with anyone. For some, it’s an emotional experience: 'For a lot of people, this is a pivotal moment, and we are aware of that,' Bossler adds.

She emphasizes that a debt counselor will only proceed with what you are comfortable with, so if there’s any part of your financial situation you feel uneasy about, make sure to voice your concerns.

Once your counselor has a clear understanding of your financial standing, they’ll present you with possible steps to improve your situation.

The Next Steps in Debt Counseling

Your counselor might suggest a debt management plan—more on that shortly. They could also discuss options for settling your debt or filing for bankruptcy. Alternatively, they may recommend managing your debt independently, offering tips or resources to help ease the load.

Bossler likens it to visiting a doctor for a physical exam. Your doctor will offer recommendations based on the information they gather from your medical history and check-up, but unless there’s an urgent situation, they’ll present you with options to consider, rather than giving you a set course of action. The choice is ultimately yours.

'We help the consumer evaluate what options are practical based on their finances, credit score, and budget, and assist them in creating a strategy to tackle their debt,' Bossler explains.

Understanding Debt Management Plans

Credit counseling agencies provide debt management plans (DMP) to simplify your debt by consolidating it into a single payment. The agency negotiates with your creditors to create an agreement, which may include a lower interest rate or extended repayment terms. Instead of making multiple payments to various accounts, you’ll send a single payment for the DMP.

Your counseling service will manage all communication with your creditors, offering relief if you’re feeling overwhelmed. 'If someone is completely drained from making those calls or stressed by the mail they’re receiving, these are common reasons people opt for a debt management plan,' Bossler explains.

All of your payments go directly to your debts, but there may be fees associated with the program. Typically, there’s a setup fee of up to $75 and an ongoing monthly fee ranging from $25 to $75.

You don’t have to rush into enrolling in a DMP. Your counselor can estimate how much faster you could pay off your debt by reducing interest rates or monthly payments instead, and they can also project how this option may affect your credit score. 'A reputable credit counseling agency will help you understand how this decision could impact your credit,' Bossler says. 'You’ll leave with a clear understanding of the pros and cons, so you can make an informed choice.'

The impact goes beyond just your credit score—a knowledgeable counselor will help you understand how choosing a DMP or other debt management options may affect your broader financial goals.

If you decide to enroll in a debt management program, you’ll be able to access details about your plan online and contact a support team by phone whenever needed.

Stay Connected

For some, a single hour-long phone call and a few follow-up emails are enough to feel organized and ready to tackle their debt. However, you may find that regular conversations with your counselor can help keep you motivated and enable you to adjust your strategies more quickly if your financial circumstances change.

'We understand that financial health isn’t always a straight path,' Bossler says. 'There’s always a solution. It might not be the one you expect, or the perfect fix you were hoping for, but there’s always a way to address it.'

Have you worked with a counselor to manage your debt? Share your experience in the comments—I’d love to hear about your results.