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Simple English definitions for legal terms
credit counseling
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A quick definition of credit counseling:
Credit counseling is a service that helps people who are struggling with debt. A credit counselor will look at your debts, credit, and budget to help you figure out the best way to pay off what you owe. They can also negotiate with your creditors to lower interest rates and fees. The goal is to help you avoid bankruptcy and create a plan to manage your debt. Non-profit agencies usually have lower fees and are supported by grants, while for-profit agencies charge more. Credit counseling is also called debt counseling or financial counseling.
A more thorough explanation:
Credit counseling is a service provided by a credit counseling agency that helps people manage their debt and finances. The goal of credit counseling is to help people avoid bankruptcy and get out of debt.
Credit counselors evaluate a person's debt, credit, and budget to help them create a debt management plan. This plan allows the person to make monthly payments towards their debt. Credit counselors also negotiate with creditors to reduce interest rates and late fees. They may also negotiate debt relief or debt consolidation.
Most credit counseling agencies are non-profit and offer services in-person, online, and via telephone. For-profit agencies also exist, but they tend to be more expensive for consumers. Non-profit agencies usually have lower fees and charge only for evaluations and the creation of debt management plans.
Examples of credit counseling programs include those offered by universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service.
Bankruptcy law requires anyone filing for Chapter 13 bankruptcy to undergo credit counseling. The United States Trustee Program keeps a list of approved credit counseling agencies for pre-bankruptcy counseling.