Credit counseling – this industry was started by the National Foundation for Credit Counseling. However, there are currently thousands of companies who call themselves credit counselors. The NFCC “promotes the national agenda for financially responsible behavior and builds capacity for its members to deliver the highest quality financial education and counseling services.” They certify counselors who offer services that will help you make a financial plan for yourself.

However, there are others who call themselves “credit counselors” who will scam you out of money. There is no regulatory agency for credit counselors and they are free to do whatever they want. They can charge you upfront fees and not provide you any services. Credit counselors have a bad reputation for make false claims.

Debt Management Plan – In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Joining a DMP can negatively affect your credit. You should only join if you have been advised by a CERTIFIED credit counselor. There are many DMP scams out there and it possible that they would take your money and run.

Debt negotiation – this is where you negotiate with your lender to pay a percentage of your total debt. This is good for the lender because if you file for bankruptcy they would not get anything. However, it does not look good on credit reports because why would a company lend you money if they think they would not get it back?

Debt settlement – pretty much the same thing as debt negotiation. What a lot of agencies and companies will do is charge you a huge amount to lower your debt, but they will enter into a debt settlement with your credit card company. Why pay a 3^rd party to do this when you could try and do it yourself?

Debt Consolidation – this is a secured loan (usually with your home as collateral) so that you can consolidate your debt into one payment. This can help you save money on interest rates, but it is always risky to put your home up as collateral. You could also end up spending way more money in fees and interest than what you save. american debt consolidation is a good place to look for information regarding this.