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How to Become a Debt Counselor

Updated on March 12, 2015
Debt counselors work with people to help them improve their financial management and get out of debt
Debt counselors work with people to help them improve their financial management and get out of debt | Source

Introduction

Debt counseling is an essential role in today's economy as individuals struggle with mounting credit card bills and other types of debt. A good debt counselor can help people to understand the areas of their life that are draining their finances, provide advice on credit and debt, teach financial responsibility and help people take steps to get back in control.

This article explores what is involved in becoming a debt counselor and how they can help people get back in control and learn responsible financial management. We'll cover:

  • What debt counselors do
  • Desirable skills for a debt counselor
  • Training to be a debt counselor
  • Other areas to be aware of if you want to become a debt counselor

People often turn to debt counselors when they have nowhere else to go
People often turn to debt counselors when they have nowhere else to go | Source

What debt counselors do

The central role of a debt counselor is to help individuals understand why they are in debt and to provide practical advice and actions that they can take to get out of debt in a responsible, practical way. This typically involves the following:

  1. An initial meeting with the person or people in debt to understand their particular issues.
  2. Examining outstanding loans, credit issues, amounts and interest rates.
  3. Finding out about late payments, credit history and other aspects that can damage a person's credit rating.
  4. Understanding a person's current budget and where their money is being spent.
  5. Helping people to restructure their finances to allow loans to be paid off.
  6. Working with lenders to establish fairer repayment terms and to defer or reduce interest charges.
  7. Teaching responsible financial management to their clients.
  8. Ensuring steps are taken to prevent a client going back into debt.

Desirable skills for a debt counselor

Because of the field that they work in, there are several skills that are very useful to being an effective debt counselor:

  • A good understanding of maths and basic mental arithmetic.
  • An appreciation of the cost of living and budgeting.
  • Good interpersonal and communication skills.
  • Sensitivity towards a person's financial and other needs.
  • Knowledge of effective counseling techniques.
  • The ability to listen and offer practical, actionable advice.

A good understanding of math and money is essential
A good understanding of math and money is essential | Source

Training to be a debt counselor

The training for a debt counselor varies from state to state and from country to country, but in general:

  • Obtain a Bachelor's degree in finances or a related field such as accounting, financial management or economics.
  • Obtain a Master's degree in counseling, social work or a related field.
  • Go through training as a counselor, understanding the requirements for certification, qualifications and other needs from your state or country.
  • Gain specialist training as a debt counselor, focussing on helping people deal with credit and debt issues.
  • Obtain the necessary certifications to practice as a counselor.
  • Contact prospective employers - These could be government or state agencies, non-profit organizations, citizen advice bodies or private groups.

Other areas to be aware of if you want to become a debt counselor

There are some other factors that you might want to consider if you'd like to go into a career in debt counseling:

  • You will need a good degree - As debt counselors are responsible for providing accurate, factual advice and actions, this needs to be reflected in a high-quality degree.
  • Being a debt counselor is about understanding the financial issues of people and then communicating practical actions in a simple, achievable and respectful way.
  • People are often embarrassed about admitting to financial mistakes; because of this, it's essential to be sensitive and professional when helping people come to terms with their issues.
  • Certification varies greatly from place to place. Make sure that you understand what is required from a debt counselor in your area before making any formal applications for education or qualifications.

Part of being a debt counselor is helping others take responsibility for their financial decisions
Part of being a debt counselor is helping others take responsibility for their financial decisions | Source

What is financial counseling?

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In closing

Although it can be a very challenging role, debt counselors have the abilities and tools to help people turn their lives around.

Through understanding a person's financial issues and providing the right types of advice, they can make a substantial, positive impact on someone's life and future.

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