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Credit counseling services help families alleviate the pressure associated with burdensome debt. Agencies do not help overextended people file bankruptcy; rather they help establish a plan that results in immediate relief and gradual elimination of debt. There are two main types of debt services: profit agencies and non-profit agencies. Most non-profit agencies are funded by credit card companies trying to recapture money owed on defaulted credit cards. For profit agencies are individual businesses that make money counseling people with debt problems.

Non-profit agencies do not have to pay taxes and are funded with government dollars and funds from credit card companies. Profit agencies make their money solely from the fees they charge their customers. As you can imagine, non-profit agencies usually cost less than for profit agencies. However, many companies still try to charge exorbitant fees up front. The cost for starting a counseling program should be no more than $100. You should expect monthly fees of about $50. In most cases, these fees are calculated into your monthly budget.

Most profit and non-profit debt services offer the same services, however, some states bar profit agencies from performing certain tasks such as negotiating with creditors. In such cases, the counselor advises the debtor and walks them through the process of negotiation. Non-profit agencies, on the other hand, usually have the power to negotiate with creditors directly. On the plus side, creditors are usually more willing to lower fees if there is a real plan in place and you are represented by an organization. Having a counselor negotiate for you lends credibility to your case.

In this time of economic hardship, non-profit organizations are overloaded. If you seek debt services through a non-profit organization, you may have to endure a waiting period. Your sessions and one-on-one contact with your counselor may also be limited. A hired counselor may be more accessible. So, if you wish to have maximum contact and constant updates, a profit agency might be your best bet. If cost is a factor, however, the money you save with a non-profit agency might be worth the wait.

The amount of time that it takes for debt counseling agencies to complete negotiations and set up a payment plan depends primarily on how much debt you have. If your creditors are particularly stubborn, it may take a while for your counselor to complete negotiations. Again, a hired counselor will probably have more time to devote to your case which means it will close quicker.

Debt services have high success rates if the plan is followed to completion. They are also more successful if help is sought as soon as financial problems begin. If financial problems are allowed to linger and escalate, bankruptcy might be the only alternative. It is recommended that people seek debt counseling as soon as they find it difficult to make one credit card payment. Unfortunately, many people wait until it is too late.

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