DECA Personal Financial Literacy (PFL) Practice Exam

When a person is behind on debt payments, a credit counseling service can provide valuable support by setting up a realistic payment schedule with creditors. This service is designed to help individuals regain control of their finances by assessing their debts and income, then negotiating with creditors to create manageable payment plans.

The objective is to help the individual make consistent payments that fit their financial situation, ultimately working towards settling the debt over time. This approach fosters communication between the debtor and creditors, which can lead to reduced interest rates and waived fees, thus easing the overall burden of debt.

The other options indicate actions that are either unrealistic or not typically offered by credit counseling services. Forgiving all debts would not be a standard practice, as creditors usually expect repayment. Providing loans to pay off existing debts would also not align with the primary role of credit counseling, which focuses on managing current debts rather than creating new ones. Reporting debts to credit agencies is a standard practice for creditors, but it is not something a credit counseling service typically does in the course of helping a client.