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Non profit debt consolidation: Pay your debt at a low cost

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Non profit debt consolidation services are offered by companies that have received non profit status from the IRS. The non profit status doesn't mean that they offer free services. But such companies do help you with debt consolidation programs by negotiating with your creditors for a payment plan that you can afford. Have a look at the topics given below to know about non profit debt consolidation.

What happens when you enroll in non profit debt consolidation?

A non profit debt consolidation company helps you to consolidate bills just like a for-profit consolidation company. The non profit consolidation company reviews your situation through a free debt counseling session and prepares an income/expenditure analysis.

Based upon how much you can pay, the company negotiates with your creditors or collection agency. The company works out a monthly payment plan involving lower interest rates so as to help you resolve your debt problems.

When should you work with a company?

Here are the specific situations when you should be working with a non profit consolidation company.

  1. When you're struggling to pay credit card bills: Are you finding it difficult to use several credit cards simultaneously? If you have used cards for shopping or other purposes, then it's not surprising that you've racked up debt. Though distributing your payments amongst several cards may seem to be a tough task, yet you can get assistance from a non profit consolidation company to avoid serious financial problems.
  2. When you want to modify your payment plan: Do you feel that a change in your existing payment plans can bring a positive change in your financial life? If yes, then you can consider working with a non profit consolidation company. Your existing payment plans will be changed as per your financial means. In fact, you'll have only one monthly payment plan after enrollment. All you need to do is send one monthly check to the company. The consultants of the company will distribute the amount amongst your creditors.
  3. When you're fed up with the collection calls: Non profit companies can't help to stop all the collection calls. However, they can certainly help to reduce the number of calls. Just inform your creditor/collection agency that you've enrolled into a consolidation program. As such, it would be best if they contact the non profit company regarding payments and other related matters
  4. When you want to free up some cash: Usually, for profit consolidation companies charge a fee for giving debt relief to you. However, if your main goal is to save dollars while repaying your outstanding balances, then non profit companies are the best option. These companies get financial assistance from the credit unions and business organizations in your locality. So, they charge unusually low fees. Thereby, you can save money easily be seeking help from a non profit company.
  5. When you could get help with professional guidance: Sometimes, you're simply unable to take care of your bills on your own. You need a little bit of professional guidance to pacify your creditors. In such a situation, consultants from a dependable non profit company can give you the best financial advice on money management strategies. You'll be able to reduce your debts and get a firm grip upon your finances.

What are the benefits of non profit debt consolidation programs?

The debt consolidation non profit company aims to lower your monthly payments. This can be done by negotiating with your creditors in order to:

  • Cut down your interest rates
  • Eliminate or minimize late fees/penalty

Apart from negotiation, debt consolidation non profit companies also help you consolidate bills by accepting a single monthly payment. This payment is then distributed amongst your creditors. If it is a non profit credit card consolidation program, then the company will also negotiate to reduce or waive off over-the-limit charges incurred on your credit card accounts.

What you don't have to do:

You don't have to manage creditor or collection calls any more. The debt consolidation non profit company will communicate with your creditors (through letters or on phone) to make things easier for you. For further details, check out the 8 benefits of consolidation.

How do non profit debt consolidation companies work?

Non-profit debt consolidation companies rely primarily on donations from individuals and companies looking for a tax write-off. Some also charge you a small fee based on your income to help with their operating expenses. In most cases, creditors offer a certain percentage of your monthly payment to the non profit debt consolidation companies.

How do you find out if a consolidation company is non profit?

The best way to find out if a consolidation company is a non-profit organization is to check the "About Us" section in their website. You need to find if there's any mention of getting IRS 501(c) (3) non profit charitable organization status. This section of the IRS includes provisions for tax exemption granted to non profit organizations.

What are the 6 useful tips to get the best result?

Check out the 6 useful tips to get the best result from a non profit consolidation company

  1. Resolve all your doubts about the program during the free counseling session.
  2. Co-operate with the company to get success.
  3. Accept only the best repayment plan.
  4. Find out if the creditors have accepted the plan.
  5. Read through the fine print of the agreement several times.
  6. Review the statements to know if creditors are receiving payments.

How can you avoid scams in non profit debt consolidation?

There are some companies that pose as debt consolidation non profit companies in order to take advantage of debtors. These companies make attractive offers and false promises in order to deceive innocent debtors and extract more money from them. Here are the 7 things you need to do in order to avoid such scams.

  • Be careful while revealing personal details: Only reveal your financial information to a non-profit organization in person and not over the telephone or internet. Any reputable non-profit organization will ask you to sign a client disclosure form stating that they will hold your information in confidence.
  • Verify how much you need to pay each month: There are debt consolidation non profit companies which claim to offer free services. But these companies actually merge their fees with your monthly payments, which are sent out to your creditors. Read the client agreement to make sure that all of the money you are paying is going toward your debt payments and not to the organization's operating expenses without your knowledge.
  • Check out the religious affiliations: There are some companies, which deliberately use religious affiliations to touch the emotion of the people. They use religious words or quotes from Bible just to stroke the religious sentiment of the people. Beware of such companies. Don’t select a non profit company just on the basis of religious connotations.
  • Seek suggestions from your friends: It is a good idea to ask your friends about a reliable non profit consolidation company. If your friend has worked with a non profit company in the past, then he/she can narrate his/her experience. You can determine if the company is fraudulent or genuine from his/her advice.
  • Analyze the payment plan: Sometimes, companies offer debt consolidation only to induce you to enroll in the program. However, as soon as you meet the consultant, he starts telling you about the reduction in the loan amount. Keep it in mind that is not a consolidation program. It is rather a settlement program where your total outstanding amount is reduced. You should never work with a company, which offers some other program in the name of consolidation.
  • Go through the complaints: A fraudulent company will have too many complaints registered against it. Victims of the fraudulent non profit company would register complaints with FTC, CFPB, and State Attorney General's office. You can just go through the complaints to get a fair idea about the company.
  • Check the license of the company: A scam company would not have any license. So, check out the accreditation and affiliation of the company. What more, it wouldn't have a proper website with correct contact details. Browse through the website thoroughly and read the "About Us" section.

If you still have doubts about the authenticity of the company, then it would be best to ask your questions in an online forum. You can get your answers and make a decision accordingly.

A non profit debt consolidation company may charge you low fees for their services. But they'll offer you free counseling, budgeting, and money management advice. However, this kind of debt help is also offered by for-profit consolidation companies. So, what is important is to select the right consolidation company. Whether it is a non-profit or for-profit company, they should offer the services that are best for you.

"Last updated on March 14, 2013"