3. Help you create a spending plan/budget

Ultimately, reducing your debt won't work if you don't create a spending plan that allows you to live with in your means and pay down your debt at the same time. This spending plan or budget is a critical part of what a great nonprofit counselor will do with you. A good counselor will look at where your money is going and make recommendations on where you need to cut back and save money to live within your means.

4. Work with you on "secured debt"—not just "credit card debt"

There are two primary forms of debt: secured debt (e.g., mortgage debt or car loans) and unsecured debt (e.g., credit card debt). A good counselor will review your secured debt and your unsecured debt. The goal will be to first stabilize your financial life at home and make sure you can eat, keep the lights on and pay your rent or mortgage. Then, your counselor will look at how to best deal with your credit card debt.

5. Recommend a DMP if it makes sense for you

A DMP is a payment plan negotiated with the credit card company by the nonprofit consumer counseling company to help you get out of debt. In most cases, the DMP will do the following:

• It will give you a five-year plan to get your debt paid off completely.
• It will lower your interest rate on your credit card debt (or unsecured debt)—usually to less than 10 percent. In many cases, companies will lower the rate to 0 percent interest, provided you pay the bills on time.
• It will end the over-the-limit fees and annual credit card fees you are being hit with.
• It may waive your late fees on credit cards.
• The nonprofit organization will pay your bills for you (once you send the money to them), and they will show you proof of your debt being paid down.
• The credit card company may or may not report your account as being on a DMP to the credit bureaus, and it can affect your credit score.
• You may be asked to sign a DMP agreement making the payment plan terms official. Read this in detail before you sign it.