Debt consolidation counseling is a process initiated when a person has so much debt from various loans that he or she finds it difficult to make the minimum monthly payments. At this stage, most debtors seek the services of debt consolidation companies, who apart from providing financial help, also help with counseling.

Debt consolidation counseling starts with providing classes and important information on how to manage ones debt. The counseling companies send out brochures that contain important information on credit and debt management. The counseling sessions are aimed at working towards repairing the clients credit and dealing with the clients debt situation.

Most of the counselors are certified professionals in the field, and contribute towards preparing a debt reduction plan. Debt consolidation counseling is important in psychologically preparing the client to participate in the debt consolidation and management program. Most debtors are wary of participating in a debt consolidation program, largely due to ignorance. Some people stay away since they are simply afraid to address their debt issues. Undergoing a debt consolidation counseling session would help such people by dispelling a lot of the misconceptions that surround this process. A common fallacy is that debt consolidation adversely affects the credit score. The truth, however, is just the opposite. By lowering interest rates and enabling one to make larger payments towards the principal, debt consolidation only helps in improving the credit score.

Also, debt consolidation counseling helps in educating those people who are contemplating filing for bankruptcy. Declaring bankruptcy should be the very last resort, since such an action can stay on ones record for 7-10 years. An effective debt consolidation counseling program would educate against any such move.

Debt consolidation counseling can be the first step for any debtor who is saddled with huge debts. Counseling enables the debtor to conceive of a plan to effectively eliminate debt.