The Role of a Debt Counselor in Debt Management Programs


Seeking a consultation with a debt counselor is often cited as being an effective means of combating your debt management concerns. However, more often than not, the role of a debt counselor, in the debt management process, is an elusive one to all but those who have gone through a debt management program. With this in mind: what is the role of the debt counselor within the debt management process?

What is Debt Counseling?
So what is debt counseling? Before we can really address the role that a debt counselor plays in the debt management process, we need to address the issue of what debt counseling actually constitutes.

In short, debt counseling is undertaken when you have spiraling debt concerns to the extent where you no long feel you have control over the matter. At such time, as with other problems in life, you seek the help of a professional who then “counsels” you on how best to tackle those problems.

In this case, in most cases, the professional is a financial planner who takes a look at your income-stream, your liabilities, and then provides you with advice on the best way to consolidate your debts and/or manage your debts so that you can make arrangements to repay your creditors.

Debt Counselor and Financial Planning
So, a debt counselor is a financial planner? Yes and no. In most cases the debt counselor acts more like your agent, contacting your creditors on your behalf, to arrange for acceptable ways for you to make repayment of your outstanding debts to your creditors. Thereafter, still acting as your agent, you make payments to your debt counselor and he makes payments to your creditors pursuant to the debt repayment plan you, your debt counselor, and your creditors have made.

So, a debt counselor is a collecting agent? Again, yes and no. It would probably be more accurate to say that your debt counselor acts a guardian angel over your finances – he both makes sure your creditors are happy with the repayments being made, and makes sure your finances are being kept healthy enough to make such repayments.

Reasons Not to use a Personal Debt Counselor
Are there any downsides to using a debt counselor for debt relief? Absolutely! Debt counseling services are now being advertised all over the Internet and some of these debt counselors may not be acting in your best interests. For a start, it is not always easy to tell if they are suitably qualified to act as debt counselors; and second, it is not always easy to tell whose best interests they have at heart – yours or your creditors. As such, it is always recommended that you seek the opinion of someone who has used the services of any potential debt counselor before you decide on using their services.

Counseling Fees and Costs
What’s the cost of seeking a consultation with a debt counselor? The answer to this question varies widely. In certain cases some charitable debt management organizations will let you speak to their debt counselor free of charge. On the other hand, some debt counselors will charge you a percentage of your outstanding debt as a fee for their assistance, or else they will take a commission on your monthly payments to them. Either way, this can actually end up being a very expensive service (depending, of course, on the amount of debt you have outstanding and the amount of work you expect them to do).

So should you use a Debt Counselor?
Is debt counseling advisable then? Almost certainly – yes. In most cases those seeking the advice of a debt counselor are inexperienced in matters of finance and so the only real chance they’ll have of combating their debt management problems is to bring in the help of a professional in these matters. However, that is a long way from saying that all debt counselors known what they’re doing – especially with so many of them being freely available on the Internet.

Would you seek the help of a debt counselor? Yes; if I was inclined to believe that I could remedy my debt management problems more effectively using their services I would certainly seek the assistance of a debt counselor.

On the other hand, if I thought I might be able to manage my debt problems sufficiently well without needing to seek the assistance of a debt counselor, due to the fees that I’d have to pay the debt counselor, I would most likely not seek a debt counselor’s advice on how to best tackle my debt management problems.

In sum then, it really all boils down to your capabilities to discuss your current debt management problems with your existing creditors.

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One thought on “The Role of a Debt Counselor in Debt Management Programs”

  1. I have always been curious to know the difference of a debt counselor and a financial planner. I will just tend to think of a counselor more like an agent as you describe. It would be nice to have someone that invested in my cause on my side.

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