Debt Relief
Accredited Financial Counselor
Accredited financial counselor summary:
An accredited financial counselor (AFC) has the training and expertise to offer financial counseling and education to people who need help with their money situation.
The Association for Financial Counseling and Planning Education (AFCPE) administers the AFC credential in the U.S.
An accredited financial counselor can help you understand and compare debt relief solutions if you're researching ways to manage credit cards, medical bills, and other debts.
Accredited Financial Counselor (AFC) Definition and Meaning
An accredited financial counselor is a professional who has completed the necessary training and education to obtain an AFC designation from the Association for Financial Counseling and Planning Education. Accredited financial counselors work with individuals and families to help them reach their money goals and improve their financial health.
The AFC designation is a gold standard for financial counselors, though not all credit counselors are accredited. Counselors who pursue an AFC credential must pass an exam that tests their knowledge of money management, including credit and debt.
Accredited financial counselors can offer guidance on different types of debt relief, such as debt management plans, debt consolidation, or debt resolution.
More on Accredited Financial Counselor (AFC)
If you have debt and you struggle to manage it on your own, it's okay to ask for help. An accredited financial counselor (AFC) can talk you through different solutions to tackle debt and get your money situation on solid ground.
Accredited financial counselors have experience and knowledge to help people address their money challenges, create a plan to reach their goals, and improve their overall financial health. That may sound good if you're stuck and need a nudge in the right direction.
Accredited Financial Counselor: A Comprehensive Breakdown
Accredited financial counselor is a professional designation that's granted by the Association for Financial Planning and Counseling Education. This designation signals that the person who holds it has the experience and knowledge to help others with their financial decision-making.
So how does someone get an AFC credential? There are four requirements:
Education. Candidates must have sufficient education in personal finance, financial planning, or consumer sciences.
Exam. The AFPCE administers the accredited financial counselor exam, which is 165 multiple-choice questions covering nine core areas of financial counseling and education.
Experience. Accredited financial counselors need to have a minimum of 1,000 hours of experience with financial counseling and/or education.
Ethics. All accredited financial counselors must sign a code of ethics after they complete the AFC exam.
So, what does this mean for you if you need help with your financial situation? Just that if you work with an accredited financial counselor, you can trust that they have the expertise to guide you to the right solution.
You can find an accredited financial counselor near you through the AFCPE website. You can search by address, city, or state to locate AFCs in your area.
Real-Life Example of Accredited Financial Counselor
What can an accredited financial counselor do for you? Here's an example.
Let's assume that you lose your job unexpectedly, which throws you into a temporary financial hardship. You have a little money saved to keep a roof over your head, buy food, and keep the utilities on, but there's not much left to cover debt payments.
You fall behind on a few credit card bills, and you've also got a stack of medical bills from when you got sick last year. You feel overwhelmed, so you decide to talk to an accredited financial counselor about your situation.
When you meet, the counselor:
Reviews your monthly expenses and budget with you to help you understand where your money goes
Asks for details about your debt, including how much you owe, the type of debt you have, your interest rates, your monthly payments, and when you last made a payment
Walks you through possible solutions to stay on budget and manage your debt until you get back on your feet
For example, your counselor may recommend debt settlement if you mostly owe credit card balances. A certified credit and debt counselor can negotiate with creditors on your behalf to help you resolve your debts for less than what you owe.
Accredited Financial Counselor FAQs
You can contact a nonprofit credit and debt counselor for free help. They can create a debt management plan and negotiate terms with your lenders. With this method, you'll pay the counseling organization a modest monthly fee and make a single monthly payment to an account they create. The counseling agency will distribute the money among your creditors. Counselors can also review your finances and share strategies to reduce financial stress and improve your financial health.
The right solution for you depends on your situation. Debt management has a lower success rate than debt settlement, but that's because many people can't afford the monthly payment. If you can safely afford to make your debt management plan payment, it's a good solution because it costs very little and doesn't hurt your credit much. But if you can't afford your debt, debt settlement may be a better way to go. The Federal Trade Commission (FTC) says that debt settlement is more affordable than debt management.
Debt relief is similar to bankruptcy because it allows you to satisfy unsecured debt for less than the amount owed. However, there are differences.
Bankruptcy is a matter of public record. Debt settlement is a private process.
Chapter 7 bankruptcy typically takes a few months, while debt relief usually takes two to four years. Chapter 13 bankruptcy takes three to five years.
Debt relief and bankruptcy can both result in you paying less than the full amount you owe. However, about half of Chapter 13 plans result in full payment, plus bankruptcy and attorney fees. And with bankruptcy, you have to disclose everything—what you earn, what you have and what you owe. So if you don't qualify for Chapter 7, or you want to keep your money issues private, or you don't want to lose assets, debt relief might help you more than Chapter 13.
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