 TITLE: How Much Does Debt Counseling Cost? CONTENT: What Is Debt Counseling?\n------------------------\nDebt counseling—also known as credit counseling—involves meeting with a trained counselor who will evaluate your financial situation and find possible solutions for your issues with debt. The process begins with a 30- to 60-minute counseling session that involves going over information about your income, expenses, savings and what you owe. The counselor will offer insights and suggest alternatives for paying down your outstanding balances. In many cases, this preliminary counseling session is free.\nOne of the options a credit counselor may suggest is debt management plan (DMP). Here, the counseling agency works with your creditors to reduce your interest rates and may be able to extend your payment timeframe. They roll all of your monthly debts into a single payment you make to the debt counseling service, which will then pay your creditors.\nHaving a debt counseling agency make payments on your behalf does a few things. For one, it simplifies your monthly payments so you're less likely to forget making a payment on time. You also know exactly how much money you need to cover all of your debts for the month. The goal is typically to pay off your debt in three to five years, which gives you a light at the end of the tunnel.\nA DMP is not to be confused with debt settlement. Debt settlement involves a paid representative attempting to negotiate with your creditors to reduce the amount of debt you will repay. While this may offer you some relief, it also can hurt your credit in several ways. Settled accounts appear as negative information on your credit report, and the settlement process may require you to stop making payments toward your debt, which will then be counted as late. Debt settlement can be costly as well. If you're contemplating this strategy, make sure the cost of settlement plus the damage to your credit score and report don't outweigh the money you'll save by settling your debt for less than what was originally owed. END