Non profit debt settlement - How it helps you get rid of bills

Debt settlement can help you in getting rid of your debts when you cannot pay the outstanding balance in full. Check out how it can help you solve your financial problems.

When to go for debt settlement

You can go for settlement when:

  • You havent been able to make bill payments for some months
  • Creditors and/or collection agencies are harassing you for payments
  • You can pay a percent of your outstanding amount
  • You want to get rid of your debts as fast as possible
Debt settlement/negotiation is a debt relief option wherein you get rid of your debts by paying an amount which is less than your current outstanding balance. It is a way to get rid of your bills fast

Non profit debt settlement program - What it is

Non profit debt settlement programs function in the same way like any other settlement program. Know about how you can become debt free by enrolling in a settlement program. The nonprofit debt settlement companies have received non profit charitable organization status from IRS.

Have a look at the following example

  • Your outstanding balance on: CC1 - $50,000 and CC2 - $75,000
  • Both the creditors agree to reduce your payoff amount by 50%
  • Now you have to pay: CC1 - $25,000 and CC2 - $37,500
  • Thus, you save $62,500 instead of paying $125,000

How much
debt consolidation
can save you

Note1: CC - Credit Card
Note2: The amount you save through settlement can be regarded as your taxable income and it can be taken into account in your federal tax calculation

Must-haves for non profit debt negotiation

The non profit debt negotiation agreement should have:

Company information

Name of the company along with its address, licensing number, phone no., e-mail and other contact information

Professional services offered

Written document detailing the list and description of professional services mutually agreed upon

Timeline to be debt free

Within how many months youll be out of debt if you continue making the monthly payments

Negotiation fee

Exact amount you need to pay for the professional services offered by the settlement company

Monthly installment amount

How much amount you need to pay to the settlement company every month

Clause of cancellation

The companys policies and procedures of cancellation are clearly mentioned

Rescission notice

Details of how and under what circumstances you can nullify the agreement

Disclosure statement

You have to look at this before signing the negotiation contract with the company

Myths and truths about non profit settlement

Myth: You do not have to pay a professional fee when you get help from a non profit debt settlement company
Truth: Usually, the non profit settlement companies don't offer settlement programs at free of cost. However, the companies, offering non profit debt relief solutions, receive donations from individuals and companies; so, they may charge less for offering such programs.
Myth: Debt consolidation and debt negotiation/settlement are same
Truth: Debt consolidation and debt settlement are two popular debt relief solutions. However, debt settlement differs from debt consolidation regarding how they function.
Myth: Settlement does not affect your credit score
Truth: In reality, it is highly likely that your credit score will get reduced when you opt for settlement. This is because, the status on your credit reports is updated as Paid as settled.
Myth: All non profit debt settlement companies are trustworthy
Truth: A non profit debt negotiation company will not be trustworthy just because it is a non profit organization. Always check out BBB (Better Business Bureau) ratings and customer reviews in order to choose a reliable settlement company.

Last Updated on: Tue, 4 Apr 2017