That’s a long title for an article and one that makes some lofty claims about the power of Credit Counseling. The premise behind this lengthy, bold statement is simple, “Prioritizing consumer financial health and well-being is good for business.”  

Help Consumers Help Themselves

Collection representatives interact with people at a crisis point in their lives, which puts them in a unique position to offer real help to consumers just when they need it most.  Yes, obtaining a commitment from a consumer to make payment on an account is the purpose of collections, but if they are struggling to make payments on other credit lines or to afford essential housing and living expenses, what is the likelihood that they’ll be able to stick to any agreed upon payment arrangements?


Fortunately, non-profit Credit Counseling exists to help consumers get a better handle on their finances, especially when they are having trouble managing their debt. By partnering with a reputable non-profit credit counseling agency, ARM entities will have a trusted resource for their representatives to give consumers, showing that their organization cares about the consumer’s overall financial health and not just the accounts they are collecting on. This can provide some emotional relief to collection teams and make it easier for them to request payment on an account when they know they can connect struggling people to a counseling agency for valuable financial guidance at the conclusion of the call. 

What do Credit Counselors Really Do?

Once connected to a counseling agency, a certified Credit Counselor will complete a thorough review of the consumer's financial situation, prepare a current and projected budget, and provide recommendations and resources specific to their financial situation.  If appropriate, the consumer will have an opportunity to enroll in a Debt Management Program, which is a structured repayment program for unsecured debt where a consumer repays their creditors over a 3 – 5 year term. This is not a debt settlement program. Consumers will pay 100% of their debt back but at lower interest rates.  

Credit Counseling’s holistic budget counseling and debt management program strives to put clients in a better position to meet all of their expenses, rather than having to decide which bill they can afford to pay each month. Any improvement the client can make to their personal finances will lead to higher recovery rates for their creditors.

Reputation is Everything

Beyond meeting professional standards, ARM entities can demonstrate though daily interactions that they care about consumers' overall financial well-being by building access to credit counseling into their collection processes. 

See what the CFPB says about credit counseling here.

Considerations when Choosing a Reputable Credit Counseling Partner

These are the questions to ask when confirming the reputation of a credit counseling partner?

  • Are they a member of one of the two major industry associations, the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA)? This can be verified by visiting the Association’s websites: NFCC and FCAA

  • Are they licensed to operate in the states that you do business? Some counseling agencies are licensed to operate nationally, while others may be licensed in just a handful of states. If you are a large collection agency, then it will be important to have national coverage, however, if you are an agency that operates in just a few states then you may want to consider working with a smaller agency doing business in the same area. 

  • Does the agency have the capacity and partnering experience to handle your referral business?  You want to work with a counseling agency that recognizes that the quality of their performance as a referral partner is a reflection on the referring organization. Can they do “on the spot” counseling or do they need to schedule appointments? Do they have the reporting capabilities to track the metrics that are important to you.

Promote Credit Counseling with your Creditor Partners

Currently, the policy of many banks is to pull accounts back from collections if a credit counseling agency wants to include the account in a debt management program. This policy disincentivizes collection agencies from referring consumers to credit counseling for further assistance that would ultimately make them better payers. The collections and credit counseling industries should make a joint effort to encourage creditors to allow our industries to work more closely together for the benefit of consumers. At this point, it would be a great step to start the conversation with your creditor partners by pointing out the potential benefits mentioned in this article and suggest a 1 or 2-year pilot.

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