Nonprofit Debt Consolidation Companies

With the economy crashing as fast as it has lately, people who carry significant debt are concerned about making payments as their savings decrease and their job security becomes uncertain. There are nonprofit debt consolidation companies available to help get consumers’ debt problems under control. If you find yourself looking for a way to get your debt paid down and get your monthly budget a little more manageable during these trying financial times, there are things you ought to know before you choose a nonprofit debt consolidation company. If you are considering your options for getting yourself more secure financially by getting out of debt, consider whether you want to use a nonprofit debt consolidation company, secure a debt settlement, or obtain credit counseling. The path you choose can have different impacts on your financial health.

When looking into the daunting world of debt consolidation, you will encounter two types of companies. The first is nonprofit, and the second is for profit. A for profit company has a focus on, you guessed it, their profit. While they are interested in having you for a client, they are first and foremost focused on making money for their company. These firms will charge you some significant fees. You must do your research and ask questions. You will be asked to sign a contract with these firms, and you need to read every word of the contract, because there will be fees in it.

Some people choose a for profit firm because they trust a company that says up front it is trying to make a profit, rather than dealing with a nonprofit. 
Some people are suspicious of nonprofit organizations because the fear ulterior motives or lack of experienced counselors. Be careful, though, because you can find a for profit debt consolidation company with as little experience or ethical foundation as you can in a nonprofit.

Nonprofit debt consolidation companies do have to collect some kind of payment in order to keep operating. Their fees are usually built into your monthly payments. Just be sure you know what you are paying to whom. Again, you will be asked to sign a contract. Read it! Many nonprofit debt consolidation companies have very experienced counselors who really do want to help you as a consumer to get out from under your debt. Many are well qualified, and even certified, as debt consolidation and/or credit counselors.

Another factor to consider in getting your debt under control is the type of program you want to use. There are three broad categories: debt consolidation, debt settlement, and credit counseling.

Debt consolidation happens in two forms. One is a loan. This requires that you obtain a consolidation loan. It requires a credit check and approval from a lender. It can be a more difficult road to travel, but it may also be worth it because you pay off all your other creditors and owe money to only one lender, at only one interest rate, which is usually lower than the debt you had been carrying. This is an option you want to consider if your credit score is good and the move to become debt free is preemptive. If you have already had problems with delinquency, you might want to consider a consolidation service that pays your bills for you.

These companies negotiate with your current creditors to lower your interest payments and late fees. In some cases, you can even see all the late fees and additional finance charges eliminated from your current accounts in exchange for closing them and being faithful to paying the amount your creditor agrees upon with your consolidation counselor. With a debt consolidation firm, you will make one monthly payment to the firm. They will then handle the disbursement to your creditors according to the agreement you, and the firm, sign with your creditors. It is important to deal with these firms face to face in an office. This will help you avoid being scammed!

A second broad category of debt relief organizations is settlement organizations. Debt settlement is different from debt consolidation. A debt settlement firm will negotiate with your creditors also, but their goal is to get your creditors nailed down to a firm figure that you will repay. They will negotiate a settlement on the amount you owe. The settlement is a fraction of the amount you actually owe. In this case, you win because the amount you pay back is less than you actually owe. The creditor wins because he is getting money he might otherwise have lost for good. The settlement firm wins because they get fees from you as you pay off the creditor. 

The third type of debt relief is credit counseling. Some companies offer free credit counseling. The catch is that it usually accompanies a settlement or consolidation service. This is usually very helpful information, and it can help consumers become more wise about the way they use debt and the way they pay it off. If you are considering a consolidation or settlement plan, accept the free counseling services (sometimes they are required if you accept services) because it will help you avoid the need for these types of services again.

Whether you choose a for profit or a nonprofit debt consolidation company, know about the background and credibility of the firms you are looking into. Check with the Better Business Bureau, and DON’T deal with an internet firm in these cases! Ask about the training and credentials of their counselors, and ask for testimonials from people who have been satisfied and dissatisfied with their services.

Debt consolidation may be key to survival in these tough economic times. Choosing a debt consolidation company is an important choice that can be a great choice, or it can compound your problems. Know what kind of program you want, and know whether you want to use a for profit or a nonprofit debt consolidation company. Educated yourself and be smart about the programs that are best for your situation.

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