Destroy High-Interest Debt: The Ultimate Guide to Credit Counseling

DebtWave Credit Counseling, Inc. is a nonprofit consumer credit counseling organization. Our certified credit counselors help consumers review their finances, create realistic budgets and explore ways to pay off credit card debt.

DebtWave also offers debt management programs, credit coaching and free financial education resources.

Yes. DebtWave Credit Counseling, Inc. is a 501(c)(3) nonprofit organization and a proud member of the National Foundation for Credit Counseling (NFCC). Our mission is to help consumers eliminate credit card debt, improve their financial habits and work toward long-term financial stability.

No. DebtWave does not provide debt consolidation loans or lend money. We offer credit counseling and administer debt management programs that may help eligible consumers repay unsecured debts under more favorable creditor terms.

DebtWave has provided nonprofit credit counseling and debt management services since 2001. Consumers have repaid more than $325 million in credit card debt through DebtWave’s Debt Management Program.

You can complete DebtWave’s online request form, schedule an appointment or call (888) 686-4040. A counselor will review your financial situation and explain the options that may be available to you.

Speaking with a counselor does not obligate you to enroll in a debt management program.

DebtWave offers credit counseling sessions at no charge. If you qualify for and choose to enroll in a debt management program, setup and monthly service fees may apply.

A credit counseling session by itself should not hurt your credit score. DebtWave may review your credit information using a soft inquiry, which does not affect credit scores.

Enrolling in a debt management program is different from simply completing a counseling session and may affect your credit in several ways.

It is helpful to have recent information about your:

• Monthly take-home income
• Housing and utility expenses
• Credit cards and other debts
• Minimum monthly payments
• Interest rates
• Transportation, insurance and food costs
• Financial hardships or anticipated expenses

If you do not have every document available, you can still speak with a counselor.

No. You can speak with a credit counselor whether your accounts are current, past due or approaching financial hardship.

Seeking help before missing payments may provide more options and help you avoid additional interest, late fees or credit damage.

The process can get started online. However, a credit counselor will need to speak with you over the phone to understand your situation better. This will help provide you the best possible solutions to resolve your debt.

The process generally includes the following steps:

1. Complete a financial review with a credit counselor.
2. Determine which debts may qualify.
3. Review your estimated payment, interest rates, fees and payoff period.
4. Decide whether you want to enroll.
5. Make one scheduled program payment to DebtWave.
6. DebtWave distributes payments to your participating creditors.
7. Continue making payments until your enrolled balances are paid in full.

Creditor participation and program terms are not guaranteed.

Most DebtWave debt management programs are designed to pay off enrolled debt within approximately three to five years. Certain plans may take longer depending on balances, creditor requirements, interest rates and the amount you can afford to pay.

Paying more than the scheduled amount may help you become debt-free sooner, provided the extra funds are properly applied.

The interest-rate reduction depends on each creditor’s guidelines and your account eligibility. Some creditors offer substantial reductions, while others may provide limited concessions or no reduction. Our average APR typically falls between 6-9%

DebtWave cannot guarantee a particular interest rate. Your counselor should review the estimated terms with you before you enroll.

A DMP may lower your combined monthly credit card payments, but results depend on your balances, creditors and financial circumstances. Our average client see roughly a $200-300 reduction in payment

Lower interest rates can allow more of each payment to reduce principal instead of paying interest. However, the program payment must still be large enough to repay the enrolled debt within the agreed period.

No. A debt management plan generally requires you to repay 100% of your enrolled principal, plus any applicable interest and fees.

Its primary benefit is the possibility of receiving more manageable repayment terms—not reducing the principal balance through settlement.

Debt management programs primarily cover unsecured debts such as:

• Credit card debt
• Retail Store cards
• Certain personal loans
• Unsecured lines of credit

Mortgages, auto loans and other debts secured by property generally cannot be included. Federal student loans, tax debts and payday loans may also require different solutions.

A counselor can review your specific accounts for eligibility.

It may be possible to leave certain accounts outside your plan, but creditor rules and your overall financial situation will affect that decision.

Creditors may require enrolled accounts to be closed, and some may object if you continue using other credit cards. Discuss every account with your counselor before deciding which debts to include.

Credit card accounts enrolled in a debt management program are generally closed to new purchases. Closing accounts may temporarily affect factors used to calculate your credit score, including available credit and credit utilization.

Closing the accounts also removes the temptation to create new balances while you are paying off existing debt.

You generally cannot continue using credit cards enrolled in the program. Depending on creditor guidelines and your circumstances, you may be permitted to keep an account outside the plan for emergencies or business expenses.

Using new credit while enrolled can make it harder to complete the program successfully.

Yes. DebtWave does not require you to remain in the program for the entire estimated term if you can repay your balances sooner.

You can generally make additional payments or pay an enrolled account in full. Contact DebtWave before sending extra funds so they can be applied correctly.

A missed or late program payment may cause a creditor to withdraw its reduced interest rate or other concessions. It could also result in late fees, collection activity or negative credit reporting.

Contact DebtWave immediately if you believe you will miss a payment. Your counselor or customer-service representative can explain the available options.

DebtWave’s program may include a one-time setup fee and a monthly service fee. Fees vary based on your state, enrolled accounts and applicable regulations.

A counselor will explain your specific fees before you decide whether to enroll. The potential interest savings should be compared with the full cost of the program.

There is no single amount of debt that makes a debt management program appropriate for everyone. But we recommend at least $7,500 of credit card debt.  Eligibility depends on factors including:

• Total eligible debt
• Current interest rates
• Minimum payments
• Monthly income
• Essential living expenses
• Creditor participation
• Your ability to make the proposed payment

A free financial review can help determine whether a DMP makes sense for your situation.

A low credit score does not automatically disqualify you from a debt management program. Unlike a debt consolidation loan, a DMP generally does not require you to qualify for new financing.

The more important question is whether you have enough reliable income to make the proposed program payment.

Possibly. Some past-due accounts may qualify, but available terms depend on the creditor and the status of each account.

If an account has already been charged off, sold to a collection agency or involved in a lawsuit, other options may need to be considered.

A debt management plan does not have one universal effect on credit scores.

Enrolled credit cards are generally closed, which can initially affect available credit and utilization. Creditors may also add a notation indicating that an account is being repaid through a counseling plan. However, the notation itself is not a credit-scoring factor.

Over time, making payments on schedule and reducing balances may help strengthen your credit profile. Results vary, and no credit-score improvement can be guaranteed.

DebtWave does not control how individual creditors report enrolled accounts. A creditor may add a notation indicating that the account is being managed through a credit counseling program.

You should review your credit reports regularly to confirm that balances and payment histories are being reported accurately.

It may be possible to qualify for a mortgage while enrolled in a DMP, but approval depends on the lender’s underwriting rules, your credit history, income, debt-to-income ratio and payment record.

If you expect to apply for a mortgage soon, discuss that goal with your counselor and prospective lender before enrolling.

No. A debt consolidation loan uses new financing to pay off existing debts. You then repay the new lender, usually through one monthly loan payment.

A debt management plan does not provide new financing. Your original creditors retain the debts, while a nonprofit credit counseling agency coordinates a structured repayment plan.

A balance-transfer card may be useful if you have strong enough credit to qualify, can receive a sufficient credit limit and can repay the transferred balance before the promotional rate expires.

A DMP may be more appropriate when you have multiple high-interest accounts, cannot qualify for affordable new credit or need a structured repayment plan lasting several years.

A consolidation loan may be worth considering if its interest rate and fees are significantly lower than those of your existing debts and you can avoid running up your paid-off cards again.

A DMP may be a better fit if you cannot qualify for an affordable loan or want repayment support, potential creditor concessions and budgeting guidance.

Always compare the total cost—not only the monthly payment.

Bankruptcy and debt management serve different financial situations. A DMP requires sufficient income to repay enrolled debts, while bankruptcy may provide legal relief when repayment is not realistically possible.

Because bankruptcy has significant legal and financial consequences, consider speaking with a qualified bankruptcy attorney about your individual circumstances. DebtWave’s educational information is not legal advice.