Non-Profit Debt Consolidation

There are many debt consolidation companies that claim to be non-profit, but it is important to distinguish exactly what that label means in such a context. When it comes to debt consolidation, “non-profit” does not mean “charity”. Rather, it refers to technical status as a 501 organization, or an organization that can write off their expenses from their taxes.

Non-profit companies certainly can be reputable organizations that will help you with your debt situation, but that does not mean that their services are cheap. While a non-profit organization really might have your interests ahead of their own, you still will have to pay fees for their services.

“Non-profit” companies can be either reputable or otherwise, just as is the case with for-profit companies. Rather than getting hung up on labels then, it is better to focus on finding a fair, honest company that proves your interests are important to them. There are several things to look for when deciding whether or not to seek debt relief with any particular company, “non-profit” or otherwise:

• A good debt consolidation company not only will negotiate with your creditors to come up with a payment plan and potentially to lower your debt load, but also will educate you about your finances and planning for your financial future. If a counselor is unwilling to work with you in this way, then this is a sign that the company is working only with their interests in mind.

• Consider seeking help from a credit counselor certified by the National Foundation for Credit Counseling. He or she should make it a point to help you learn to manage your debt.

• A good debt consolidation company will become the point of contact for your creditors so that you no longer will have to face harassment.

• Choose a company that provides you with many debt relief alternatives and takes the time to consider your unique financial situation. Companies that push a debt management plan as your only option may not have your best interests in mind.

• You must be provided with information about all fees and service charges up front and in writing. Any company that requires a large up-front fee should be avoided, because that entire sum generally will go to them with none being given to your creditors.

• Make sure that you are told about all possible consequences of your enrollment in their program. Some companies fail to tell clients that their enrollment might be listed on their credit reports, and that their credit likely will get worse before it gets better.

As is the case with all financial services, for every good company there unfortunately are some unscrupulous companies as well. Companies who boast about being “non-profit” while violating the conditions listed may be such a company. Do not let the label “non-profit” blind you from the warning signs; such companies may actually have for-profit “sister companies” that will handle your account after you enroll.

Understand also that it is possible for you to negotiate and settle your debts by yourself without the assistance of an outside source. While it may seem intimidating, many creditors will be more than willing to work with you. Taking such initiative can be very effective if you are up for the challenge.

Conclusion

Seeking assistance for your debt situation with a debt consolidation company can be a great alternative. While there are non-profit companies to whom you can turn, you must understand that they may not be any cheaper than their for-profit counterparts, so try not to be too concerned with such labels. Instead, focus on finding a company that clearly has your best interest at heart.