Credit Counseling

Debt Counceling Company

Credit Counseling and Debt Management Plans

Consumers facing a mountain of debt have several options. The worst is to do nothing — you will likely end up in bankruptcy court, with your house foreclosed and your car repossessed. Credit counseling and debt management plans are two alternatives that may be useful. We’ll explore their benefits and drawbacks, and then contrast them with our debt settlement program. If you’d like to find out exactly how much you are paying in loan interest and principal, visit our credit card interest rate calculator.

If you would like more information on Credit Counseling, contact one of our debt experts for a FREE consultation. See how much money you can save from our debt relief program.


According to a 2005 congressional report, credit counseling was a response to the mid-1960s explosion in personal bankruptcies. Credit card companies and lending banks set up the National Foundation for Credit Counseling (NFCC). The national foundation for credit counseling is the United States’ largest no-profit credit counseling agencies. Through credit counseling agencies (CCAs), members offered advice to consumers about managing their debts and finances, often in face-to-face meetings. The results varied, from setting up budgets to debt management plans (DMPs) to declaring bankruptcy. Feel free to view the NFCC reviews listed on their website.

DMPs were and are, plans to help consumers pay off their debts. They were hatched up by creditors and counselors to get borrowers to pay up instead of declaring bankruptcy. While originally set up as non-profit organizations, Congress found that many CCAs had close ties to for-profit corporations that were often run by family members or close associates. So-called “processing fees” paid by CCA clients were forwarded to the for-profit companies, representing a substantial source of profit.

How DMPs Work

In a DMP, a credit counselor works with credit card issuers and/or lending banks to achieve certain goals:

  • Reduction of interest rates on existing debt
  • Reduction of monthly minimum payments
  • Waiving any outstanding late fees
  • Consolidation of debt into a single monthly payment supervised by the CCA

The CCA would “negotiate” with the creditors, but often the programs were set up such that the concessions to borrowers were prearranged. For instance, a credit card company would have a pre-established plan to lower the APR and decrease the minimum payment, which would go into effect as a result of the CCA “negotiation.” The CCA consolidates all the required monthly payments into a single one that is presumably easier for the borrower to pay. In this way, the creditors eventually get all of their money back, albeit at a slower rate. Contrast this to bankruptcy, in which the creditors were likely to receive nothing.

The CCAs are funded by “fair share” payments made by the NFCC, often in amounts equal to 25 to 30 percent of the budgets of collection departments at credit card companies.

A Better Get Out of Debt Alternative is Debt Settlement

Debt settlement offers a different perspective on helping debtors get out of debt. Debt settlement companies (DSCs) do not have sweetheart relationships with or subsidies from creditors. A DSC’s goal is to substantially reduce the indebtedness of its clients, not to merely extend their current debt over a longer payback period. In other words, the negotiations between a DSC and a creditor are real, not a sham.

When you enroll with a DSC you are making the conscious decision to withhold payments from your creditors in order to secure more favorable terms via the debt settlement process. Mortgages and car loans are not part of the process. Instead of paying the credit card companies, the debtor deposits the program payments into a 3rd party escrow account at a bank and allows the balance build up. The DSC then approaches each creditor and offers a settlement for less than the full balance. Sometimes this is a via lump-sum payment and sometimes the settlement is paid in installments. In this way, the debtor gets out of debt with a program payment that is affordable. The tradeoff is that consumer’s credit will be impacted in the near term due primarily to falling behind on their accounts prior to settlement.

Consumers must decide which course of action is best for them. For those who wish to end their debt quickly, Pacific Debt’s program offers unique advantages over debt management plans and filing for bankruptcy. Take a look at our debt relief program and choose your state to see if you qualify.

Pacific Debt has helped thousands of people reduce their debt. Since 2002we’ve settled over $200 million in debt for our clients. Contact us today to see how we can help.


"My dealings with the Pacific Debt representatives was a most pleasant experience. I started the program in October of 2012, my goal being to pay off all my credit card debt as quickly as possible."


"I just wanted to thank you for work you did for us on settling our credit cad debts. You were honest and explained everything you were doing in detail. I had a lot of confidence in you. I felt that I did the right thing in contacting your Pacific Debt and you to do by right by us."


"I just wanted to send a quick thank you for all you have done! It wasn't an easy couple of years financially, but I made it through! Thanks to you, Pacific Debt, I can now make a fresh start."

Free Consultation
close slider

See How Much You Can Save

Start saving today! Get a personalized plan from Pacific Debt, the leader in debt relief with an A+ Rating from the BBB.

How much debt do you have?

Click to estimate

See Savings

100% free savings estimate and will not affect your credit