Debt counseling is a process of advising on how to manage ones income and expenses, and on what do once debts pile up to excessive levels. So, signing up for debt counseling can be seen as a pre-emptive action, though most people do so after they find themselves deep in debt.

Debt counseling begins with the pre-emptive actions that one can take to stay out of debt. The key here is to understand the importance of ones credit score and how it can affect not only the interest rates that one is offered but also the chances of getting a loan, insurance, housing, and even employment. The debt counseling process then educates a citizen of his or her rights under various federal acts.

Under the debt counseling process, the person is cautioned to pay attention to the credit card balance carried, and how much of it is being paid off monthly. Paying only the minimum balance on a credit card wont help in eliminating the debt quickly. Debt consolidation counseling is undertaken at a stage when the debt levels are so high that various unsecured loans bearing high interest rates need to be paid off with another secured loan bearing a lower interest rate.

Debt counseling also targets effective money management as a key aspect. The counseling works by making people aware of the need to closely watch the monthly credit card statements and not go over the limit. An important piece of advice that debt counselors give is to use cash instead of credit cards while buying essentials like groceries and gasoline.

Debt counseling is an important step to a debt-free life, particularly for people who find it difficult to limit their expenses within their incomes. Variants of debt counseling include credit counseling and consumer debt counseling.