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If you're feeling overwhelmed by in today's high-rate environment, the last thing you want is to add another expense to the mix. That's why many people hesitate when they hear the term . While getting this type of expert debt support certainly sounds helpful, there are fees involved with their services, and it can be tough to justify the extra costs when you're already struggling to make ends meet.
But could be the lifeline you need to get back on track. With credit counseling, you get expert insight into your financial situation, help with building a realistic budget and that can help you better manage or pay off your debt. And, while you generally won't get access to these services for free, working with a credit counselor could be more affordable than you think.
So, how much can you expect to pay for credit counseling? Below, we'll examine what to know about the cost of this type of debt relief — and how it compares to what might cost you over time.
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The cost of credit counseling depends on a few key factors: the agency you work with, the type of service you need and whether your financial situation requires a one-time consultation or ongoing support.
Let's start with the basics. Most nonprofit credit counseling agencies offer free initial consultations. These sessions are typically about 30 to 60 minutes long and include a review of your income, expenses, debts and credit report. You'll walk away with a clearer picture of your financial situation and some guidance on what to do next.
If your counselor recommends , which is a structured repayment plan that consolidates your unsecured debts into one monthly payment while lowering your rates and fees, that's when the costs start to kick in. You'll usually be charged:
So if you , you could end up paying between $300 to $600 per year in maintenance fees on average. That's an added cost on top of your high-rate debt, but it's still much less than the cost of interest on high-balance credit cards or the fees charged for many other types of debt relief.
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Credit counseling is just one of many tools you can use to get out of debt, but it tends to be one of the most cost-effective. Here's how the cost of credit counseling stacks up to the other common debt relief solutions:
Debt forgiveness: Debt forgiveness, also known as debt settlement, involves working with a debt relief agency to negotiate with your creditors on a lump-sum settlement that's less than what you owe. That sounds appealing, as it can lower your total balance , but it comes at a steep price. These companies often when negotiations are successful, which can easily amount to hundreds or thousands of dollars. The process can also damage your credit score and lead to tax consequences, as the forgiven debt is considered taxable income.
Debt consolidation: Taking out a loan to can simplify repayment and possibly reduce your interest rate, but there are costs involved. You may have to pay origination fees, and if your credit score isn't great, the interest rate may not be much better than what you're already paying. That, in turn, can drive up the total cost of consolidation.
Bankruptcy: Filing for bankruptcy is typically the last option you should consider. While Chapter 7 bankruptcy can discharge certain debts, , like court filing fees (typically a few hundred dollars on average) and attorney fees that can add up to thousands of dollars by the time the case is complete. Bankruptcy also leaves a lasting mark on your credit report for up to 10 years, driving up the cost of borrowing over the long haul.
Taking advantage of what credit counseling offers can be an affordable and smart way to better manage your debt. While the monthly costs of a debt management plan through a counseling agency generally range from $25 to $75 a month, that's typically a small price to pay for the professional guidance, reduced interest rates and structured plan that you'll get in return.
And, unlike more aggressive forms of debt relief, credit counseling generally doesn't damage your credit score. In fact, it could help improve your credit over time by establishing consistent, on-time payments. So, if you're struggling with debt and unsure of where to turn, chatting with a certified credit counselor could offer you clarity — and it may just be the first step toward a more manageable financial future.
