Consumer debt counseling refers to the process of advising consumers on the various ways they can clear their debt without resorting to bankruptcy. The target audience is those people who have run up huge credit card balances that they find hard to pay back. The consumer debt counseling industry evolved in recent times primarily due to the increasing debt levels in American society.

Consumer debt counseling also helps creditors get back their money when the debtors are made capable of paying back the dues. This helps creditors since otherwise, the debtors would file for bankruptcy and the debt would be discharged. Creditors have long supported the growth of the consumer debt counseling industry. This has been in practice since the 1980s. An estimate in the prefatory note in the Consumer Debt Counseling Act (2004) mentions that creditors returned 15% of the money they made from the consumer debt counseling industry back to this industry.

However, as with any industry, this industry too has witnessed dramatic changes. Rising credit card debt among Americans prompted the growth of a large number of consumer debt counseling agencies. While most of them entered with the right intentions, a few of them spoilt the field by failing to deliver on their promises, thereby hurting consumers instead of alleviating their misery. The wide coverage that such incidents received in the media has made individuals apprehensive to seek the help of such agencies. Individuals have increasingly started to resort directly to bankruptcy rather than try consumer debt counseling.

Though consumer debt counseling works wonders, the success lies in understanding that both the individual and the counseling agency need to be disciplined and honest in sticking to their commitments and promises. This is easier said than done, since it’s precisely those individuals who lack financial discipline who end up seeking consumer debt counseling.