 TITLE: Is Debt Counseling a Good Idea? CONTENT: When Does Debt Counseling Make Sense?\n-------------------------------------\nWorking with a debt counselor begins with signing a service agreement and bringing them up to speed on your financial situation. Being as upfront and honest as possible here can only help you—debt counseling is less about dwelling on your past mistakes and more about finding positive solutions you can feel good about. Once your counselor reviews your information, you can expect an initial meeting to begin mapping out a plan.\nThe potential benefits of debt counseling include the following:\n*   **It can help rebuild your credit.** Being over your head in debt can put your credit at risk, especially if you've fallen behind on payments. (Your payment history makes up 35% of your FICO® Score☉ .) The amount of debt you have as it relates to your available credit—your credit utilization—accounts for another 30% of your score. If you're struggling to find room in your budget to make your minimum payments, working with a debt counselor could help get you on the right track.\n*   **It can reduce debt-related costs.** Depending on your situation, your credit counselor may suggest enrolling in a debt management plan. This involves them negotiating new payment plans directly with your creditors. You'll then make one monthly payment to the counseling agency, and they'll pay your creditors on your behalf. The service will likely come with a monthly fee, but it could be worthwhile if you're able to lock in lower interest rates or waive certain creditor fees. Bringing down these debt-related costs can help you get out of debt faster because a larger percentage of your payments will go toward your principal balances. It can also help simplify and streamline your debt repayment efforts because you'll only have one payment to take care of.\n*   **It can boost your financial health.** Debt counselors don't just focus on your credit. They're trained to look at your financial big picture and provide guidance accordingly. This often includes assessing your income and expenses to help you create a budget that's tailored to your needs. Their advice could include everything from reducing your monthly expenses to increasing your income to understanding how to use credit responsibly. END