Credit Counseling companies negotiate a lower interest rate with your credit card companies and other lenders. They negotiate repayment plans with your creditors. The lenders typically pay the consumer counseling agency their fee. The Credit Counseling agency will make the payments to your creditors from money that you send to the credit counseling agency.

When searching for a credit counseling agency, avoid:

1. Big upfront fees.
2. No accreditation. Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
3. Delayed or missing payments. Some companies pocket your first months' payments as a fee, rather than passing the money on to your creditors.

A statistic shows that 75% of people will drop out of the credit counseling service before completing the program and having bills paid off.