A Consumer Credit Counseling Service involves working with creditors to establish a Debt Management Plan (DMP) for a consumer. A DMP may help the debtor repay his or her debt by working out a repayment plan with the creditor. Credit counselors refer to the terms dictated by the creditors to determine payments or interest reductions offered to consumers in a DMP.

Consumer Credit Counseling Pros:

1. The most common benefit of a DMP is the consolidation of multiple monthly payments into one monthly payment, which is usually less than the sum of the individual payments previously paid. This is because credit cards banks will usually accept a lower monthly payment from a customer in a DMP than if the customer were paying the account on their own.

2. The second benefit of a DMP is the reduction of your creditors interest rates. A customer with a defaulted credit card account will often be paying an interest rate approaching 30 percent. Upon joining a DMP, credit card banks sometimes lower the annual rates charged to 5 to 10 percent.

3. The CCCS process can bring delinquent accounts current. This usually occurs after making a series of on-time payments through the DMP as a show of good faith to complete the program.

Consumer Credit Counseling Cons: