Even though certified credit counseling agencies can save debt-burdened individuals thousands of dollars and prevent years of financial stress, their services are underused by those who could benefit from them the most. In this white paper, find out the different ways that certified credit counseling agencies can help you and your family, whether you are already struggling with debt or simply facing tough financial decisions. To get in touch with a certified financial advisor and learn how to improve your financial situation, contact Advantage Certified Credit Counseling today.

1. What A Certified Credit Counseling
Agency Can Do For You
Although more people have been turning to certified credit
counseling agencies in recent years to help them with their
financial woes, only a fraction of people who could benefit
from credit counseling actually use those services. Credit
counseling agencies can be useful in a number of ways that
people may not expect. Here is a closer look at what credit
counseling services can do for you.

2. Provide Confidential
Consumer Credit Counseling
Consumer credit counseling services provide a total overview
of your financial situation. During the counseling session, a
certified credit counselor reviews a person’s total income,
expenses, and debts. Toward the end of the session, the
counselor will identify areas that can be improved on and make
recommendations to help the individual make more
appropriate financial decisions. Counseling sessions can take
place online, over the phone, or in-person.
Review Your Credit Report
Your credit score will impact your ability to buy a car, take out a
mortgage, borrow money, rent an apartment, and more. A
credit report can be obtained for free from
AnnualCreditReport.com, providing a catalogue of the
financial transactions and obligations that contribute to your
credit score, including mortgage payments, medical bill
payments, credit card payments, student loan payments, and,
of course, outstanding debt. It is important to review your
credit report for accuracy, ensuring that your credit score
reflects your actual financial situation. However, this
information won’t help you unless you understand the report.
A certified credit counselor can review your report with you and
help you interpret its information, allowing you to verify or
challenge what is stated in it.
Help You Save Money Instead
of Live Paycheck to Paycheck
When every penny you earn is spoken for before you even
receive your deposit, you and your family are vulnerable to any
financial emergency that comes along – car breaks down, an
uninsured family member needs medical attention, you or a
partner loses a job, and so on. If you are struggling to cover all
of your bases every month, credit counseling agencies can help
you manage your finances so that you’re living within your
means and able to set money aside every month for savings
and unforeseen expenses.
Protect Your Retirement Funds
In an effort to pay off debt, some people start prematurely
pulling money from their retirement funds. Not only does this
incur steep penalties for early withdrawal, but preventing the
investment from maturing in the account means significantly
reduced future savings. By taking active steps to work with a
credit counseling agency to manage debt, individuals are not
only improving their current quality of life but protecting their
futures as well.
Enroll Individuals in
Debt Management Plans
Sometimes the educational aspects of credit counseling are
not enough to help people wriggle out from beneath heavy
debt. Instead, at the end of a credit counseling session, a
certified credit counselor may recommend enrolling in a Debt
Management Plan. To qualify for a Debt Management Plan, an
individual must be behind or in danger of falling behind on
payments, only be able to make minimum payments every
month, or face a situation that will make payments more
difficult. While an individual is enrolled in the program, the
credit counseling agency will work with creditors to lower
monthly payments. Clients make a single payment to the credit
counseling agency, which disperses the appropriate amounts
to the creditors. Debt Management Plans have a few distinct
advantages:
Lowers Bill Payments
Credit counselors may be able to facilitate lower monthly
payments because within a Debt Management Plan, credit
counselors will work with creditors that may be able to lower
interest rates and waive late fees.
Shortens the Time It Takes to Pay Off Debt
Paying down a large amount of debt by yourself may take 10
years or more. However, by working with a credit counseling
agency and following a structured Debt Management Plan,
debtors can pay down their loans in 3-5 years.
Ends Collection Phone Calls
The constant phone calls to your house and your family
members can add even more stress to the situation. However,
by enrolling in a Debt Management Plan, calls will end within a
couple months of successfully following the program.

3. Provide Housing Counseling
Credit counseling agencies offer 3 types of housing counseling: foreclosure prevention counseling,
pre-purchase counseling, and reverse-mortgage counseling. Foreclosure prevention is for anyone
who is either currently facing foreclosure or is worried about falling behind on mortgage payments. This
session helps people understand the foreclosure process, the options they have if they are in danger of
losing their homes, tips for working directly with mortgage lenders, and provides participants with a
personalized budget and plan of action.
For many people, a home is the largest, most impactful purchase they will make in their lifetimes. Before
buying a house, particularly for first-time buyers, pre-purchase counseling can help you understand what
you can afford to purchase, the type of mortgage that would best suit your situation, what interest rate you
can expect, the loan application process, the price of closing costs, and expenses you can start preparing for
as a homeowner.
Reverse mortgage counseling is required for anyone pursuing a reverse mortgage. Reverse mortgages are a
type of home equity loan that allow homeowners to take out money against the value of their primary
residence. Unlike other home equity loans, though, borrowers do not have to repay the loan until they sell or
move out of the home. Often, the sale of the home will be used to fulfill repayment. Available to people aged
62 years or older, these loans allow individuals who have built up equity in their property to receive a steady
income while living in their homes. During a reverse mortgage counseling session, participants will learn
about the fees and costs associated with reverse mortgages as well as how they are able to receive and
spend the money they gain from the loan.
Provide Bankruptcy Counseling
Credit counseling agencies can provide 2 types of bankruptcy counseling: pre-filing bankruptcy
counseling and pre-discharge bankruptcy education. Before filing for bankruptcy, the government
requires individuals to participate in financial counseling so that they understand all their options prior to
filing for bankruptcy. This counseling is designed to help individuals understand their financial situation
and determine if there are other suitable options for eliminating their debt. At the end of the counseling
session, the participant will be awarded a certificate of completion.
Before your debts are discharged, the new bankruptcy code requires you to attend pre-discharge
bankruptcy education (also called post-filing debtor education). This class provides information on how to
plan a budget, strategies to manage money, and ways to use credit wisely. As with pre-filing bankruptcy
counseling, participants will receive a certificate of completion afterward.

4. Credit Counseling Agency Limits
While credit counseling agencies can help individuals with a wide range of
financial issues, there are a few services no certified credit counselor may
legally provide:
▶ Make financial loans: Credit counseling agencies are not
banks or lending institutions, so they cannot make or buy
loans.
▶ Provide legal advice or opinions: For legal advice (such as
regarding bankruptcy or foreclosure), debtors need to consult
with an attorney.
▶ Help debtors file for bankruptcy: While credit counseling
agencies will provide pre-filing bankruptcy counseling, the act
of filing for bankruptcy is another legal matter that will require
the assistance of an attorney.
▶ Make corrections or remove information on a credit
report: If there are inaccuracies on a credit report, credit
counseling advisors are able to guide clients through the
process requesting a correction. However, if there is a
damaging, but factual, item on a credit report, a client must
wait the state-mandated statute of limitations
(typically 7-10 years) before it is removed.
Advantage CCS is a non-profit financial counseling firm that provides Debt
Management Programs, bankruptcy counseling, housing counseling,
financial education, and budgeting services. If you are struggling with
debt, contact a certified financial advisor at Advantage CCS.
www.advantageccs.org
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