Credit Counseling applies a “debt consolidation” model, which reduces the interest that you pay on your total debt principal.  But unfortunately, in these days of high financial volatility, interest rates are not going down. THEY ARE ONLY GOING UP. Adding to this problem, Credit Counseling programs only negotiate a basic reduction of the actual interest rate, typically, 2-6%.  Consequently, the promises that Credit Counseling programs make are simply unreal, which causes them to have an alarming 79% dropout rate. 

The lackluster success of Credit Counseling is largely due to in part to the reality that interest rate reduction alone generally CAN NOT provide enough financial relief to people that have severe financial problems.   Moreover, Credit Counseling causes you to pay almost double your original debt because you will pay the amount loaned to you plus an enormous amount of interest, something that isn’t fair since you already paid back so much to your creditors and now your problem may have gotten worse.

If you’re concerned about not having long-term damage to your credit, aside from Bankruptcy, Credit Counseling may be your worse choice.  Upon enrolling in a Credit Counseling Program, your enrollment will be listed negatively on your credit report until the point you pay off your total debt in an average of 5 to 7 YEARS.  Plus it will continue being reported for up to 7 more years after you complete the program. Thus, your credit can be adversely affected up to 14 years! In closing, Credit Counseling is an option that should be very carefully considered.