Dealing with Debt: Real-Life Success Stories

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A growing number of Americans are finding it difficult to pay their bills, fueling widespread financial stress, anxiety, and in some cases, despair.

“Debt is no longer a background concern, but a daily struggle for many families,” said Bruce McClary, a vice president at the nonprofit National Foundation for Credit Counseling (NFCC). “People are having to make some really tough decisions: Should they buy certain types of groceries or get their medication? Should they pay one bill on time and let another one slide?”

Many families living paycheck to paycheck rely on credit cards to make ends meet have balances they can’t repay. Nearly half (47 percent) of all cardholders carry debt from month to month, paying an average interest rate of nearly 20 percent, according to Bankrate.com. About one in five (22 percent) of those with credit card debt feel they’ll never pay it off.

According to an NFCC survey conducted by The Harris Poll last summer, a  growing number of consumers burdened by credit card debt are missing payments or dipping into savings or shifting balances between cards to get a lower interest rate.

Two-thirds of the survey respondents said being in debt makes it harder for them to make the best decisions in other parts of their lives.

“They feel like they are constantly just treading water financially, and that they don’t have a lot of room to improve their station in life, said Kathy Steinberg, a vice president at The Harris Poll. “They’re really just trying to get through the day.”

Digging out from a mountain of credit card debt might seem impossible. But with hard work, discipline, and guidance from a certified credit counselor, it can be done.

On a recent episode of Consumers’ Checkbook’s Consumerpedia podcast, we spoke with two people who used nonprofit credit counseling programs to get out of debt. Here are their stories:

Success Story #1: Jeanine Kosinski    

Jeanine Kosinski is a language educator and dog trainer in San Francisco. Earlier in her career, she had a well-paying job at a Silicon Valley tech firm. Then life threw her a curveball. 

Due to a traumatic event at work, Kosinski found herself unemployed and unable to pay her bills for the first time in her life. Emotionally overwhelmed, she became seriously ill and needed to be hospitalized.

Eventually, Kosinski maxed out her five credit cards. Her financial situation became “completely unsustainable,” she recalled, with $35,000 in credit card debt, plus a mortgage and two student loans.

“I was in a bad downward spiral,” Kosinski told Checkbook. “I was hiding it from my friends and my family because I was ashamed of it. I had never been in debt in my life, and I kept kind of denying everything to myself. And the more dire my situation became, the sicker I got.”

Eventually, Kosinski realized she needed help to rebuild her financial life. She ignored ads from debt-relief companies that promised quick fixes—her father had warned her about these too-good-to-be-true offers. Instead, she listened to a trusted friend and contacted a nonprofit credit counselor. 

“It was one of the things that changed my life for the better,” she said. “Not only to get me out of the debt, but to give me that confidence and kind of faith in people.”

Kosinski agreed to a structured repayment plan and learned how to reduce her spending. With “shame-free” guidance from a counselor at the nonprofit American Consumer Credit Counseling—and a lot of hard work—she was debt-free in less than a year.

Her message to others is simple: “You can do this. You can absolutely do it. But you can’t do it without help. So, call these guys. They will be kind to you. They will help you learn about your money and rebuild your relationship with your creditors. And then you can be free. It sounds really impossible when you’re in it, but I can tell you right now, if you call them, it will change your life for the better.”

Success Story #2: Tiana Moore

Tiana Moore is a mom and an operating room nurse in New Britain, Conn. She lost her job in 2019 and then was furloughed from another one during the pandemic the following year.

“I honestly felt like I was drowning,” Moore said. “I had to contemplate between covering those minimum payments, putting food on the table, or paying my mortgage and raising my children.”

Saddled with $21,000 in credit card debt, Moore decided to pay it off rather than declare bankruptcy. She learned about Money Management International (MMI), a nonprofit counseling agency, through her bank.

A counselor at MMI reviewed all her expenses and crafted a personalized plan. Moore told Checkbook she felt treated “like a real person going through a real struggle.”

As part of the deal, Moore shut down her credit card accounts so she couldn’t charge more to them, and she was advised not to open any new accounts.

MMI contacted her creditors and negotiated a zero percent interest rate on all her cards, down from about 29 percent. Moore then sent a single payment to MMI each month, which MMI divvied up among her creditors. 

After four years of hard work and changing her spending habits, Moore was debt-free. MMI calculated that she would have paid $54,000 to her creditors had she continued making only the minimum payments.

“I’ve learned to be more frugal. I’ve learned to be more mindful,” Moore said. “I actually busted out the old-school checkbook, and I’m writing out all my expenses; this is what we have, and this is what we need to get.”

Not only did Moore pay off her other bills, but she also built a savings account.

“I feel amazing,” Moore said. “It’s great to know that now I can invest in my future and my children’s future.”

Her advice to anyone feeling they’re drowning in debt: “Just do it. If you were ever contemplating getting help, don’t wait another day. Just do it so you can get your life back and be able to invest in yourself.”

What Nonprofit Credit Counselors Do

Trained credit counselors at a nonprofit counseling agency can help you pay down debt, even if it seems insurmountable. They also share the skills needed for long-term financial security, regardless of the amount of debt you owe. Left unaddressed, debt problems tend to worsen over time.

“Sometimes, when you’re down in the trenches with your budget, it takes somebody from the outside, a professional, to take a broad look at your situation and provide you with advice that maybe you hadn’t considered,” said NFCC’s McClary. 

A nonprofit credit counselor reviews your entire financial picture and presents a range of options; from steps you can take on your own to enrolling in a debt management plan.

“There’s no one-size-fits-all answer that applies to everybody’s finances,” said Lara Ceccarelli, an NFCC-certified counselor with American Financial Solutions, a nonprofit agency in the Seattle area. “We start by getting an overview of their concerns, their debt load, their budget, the types of accounts they have, and that way we can come up with a solution that’s tailored to their particular set of concerns and their pain points, as well as their long-term financial goals.”

Credit counselors can help with credit card debt, medical debt, student loans, and even problems paying the rent. There are also specialized programs designed for service members, veterans, and their families.

Unlike for-profit “debt relief” companies, nonprofit credit counselors don’t offer refinancing or consolidation loans. Instead, they work with creditors to secure structured repayment plans.

“A nonprofit counselor can inform you about the choices you have and help you determine the suitability of those options,” McClary explained. “With some for-profit debt relief companies, they only give you one option. They have one product, and that’s what they’re going to sell you.”

An NFCC-member counseling agency should be able to secure lower interest rates on your credit card debt. They have pre-negotiated agreements with major companies that provide concessions to participants in their debt management program. 
These include lower interest rates, eliminating late or over-limit fees, and ending collection activities.

The initial counseling session is typically free. There is a monthly fee for the debt management plan, based on the amount of debt involved and the client’s ability to pay. That fee averages about $30 to $40 a month. It’s never more than $75 a month. The fee can be waived in some hardship cases.

People who enroll in debt management programs should see their credit scores improve after they make payments on time and their debt balances decline.

You don’t need to be in a crisis to consult with a nonprofit credit counselor. They can help evaluate your financial situation and plan for long-term goals. A U.S. Department of Housing and Urban Development (HUD)-approved counselor can assist you with home-buying decisions, while other counselors specialize in student loan debt or helping small business owners.

Beware Bad Actors    

Consumer advocates warn about the potential pitfalls of using a for-profit debt relief company. Many promise quick fixes for people struggling with credit card debt, claiming to have special connections with creditors that “guarantees” success. They don’t. In fact, many creditors won’t deal with debt settlement companies.

Using a debt settlement service could leave you deeper in debt than when you started. That’s because these companies typically advise clients to stop making all payments to their creditors and to pay them (the settlement company) every month.

But instead of paying your creditors, debt settlement companies hold on to that money until your accounts are several months past due. By doing this, they claim, creditors will be encouraged to negotiate with them.
That’s nonsense. This will destroy your credit history.

Stop paying, and you can expect to receive calls and letters from debt collectors, which will only add to your stress. You’ll also incur late fees and penalty interest rates. Even worse, you could be sued. If the creditors are successful, your wages could be garnished.

In a study of companies offering credit repair and debt relief services, the Better Business Bureau (BBB) reported it received more than 11,000 complaints about for-profit debt and credit assistance companies from 2020 through June of 2023 and warned of a “pattern of misleading and sometimes fraudulent [marketing] claims.” Unhappy customers often told the BBB that after paying these companies thousands of dollars their finances ended up worse off. When they demand a refund, their requests were often denied. Consumers also often cited “higher-than-expected fees, failure to deliver on debt reduction and credit score improvement, and a lack of responsiveness from businesses when questions arose,” the BBB’s report noted.

“Some [debt relief companies] take the money and run, others will string you along, collecting payments and making promises while you fall farther behind on the delinquent accounts,” the AARP Fraud Watch Network warns.

Warning flag: If the company wants any money upfront, no matter what the reason, you’re dealing with fraudsters. It is illegal for companies that sell debt relief services on the phone to charge a fee of any kind before they settle or lower your debt.

Consumer advocates advise you not to do business with any debt settlement company that:

• Represents that it can settle all your debt for a promised percentage reduction.
• Guarantees it can make your credit card debt go away, or that it can be paid off for pennies on the dollar.
• Tells you to stop communicating with your creditors.
• Says it can stop all debt collection calls and lawsuits.
• Touts a “new government program” to bail out personal credit card debt.

“Anything a debt relief company says they can do for you, you can do for yourself—for free,” cautions the Federal Trade Commission. “You have just as much clout with your bank or credit union as these companies.”

What About Bankruptcy?

Bankruptcy may seem like a quick fix, but financial advisers warn that it doesn’t solve the problems that caused the financial hardship.

“With restrictions on repeat filing, and some of the limitations on the types of debt that are included in bankruptcy, turning to bankruptcy can be just as risky as hiring a debt settlement company,” NFCC’s McClary said. “You may end up making your situation worse by falling back into the same problems that led to the decision to file bankruptcy in the first place.”

Getting Help

NFCC can help you find a nonprofit credit counselor in your area. Visit NFCC.org or call 888-381-4779.

Don’t just search online for “debt relief,” “debt help,” or “debt counseling.” Chances are, the ads that appear at the top of the search results will be from a for-profit debt settlement company. Go directly to the NFCC website to find legitimate help.

Need help dealing with debt collectors? Click here for info on your rights.