Non Profit Debt Consolidation Company - Can It Help You?

In a country where the average debt per credit card is over $4000 and close to a quarter of Americans admitted to maxing out at least one credit card, it makes sense that people are looking for easy answers to ease their burden of debt. A non profit debt consolidation company can seem like the answer to a prayer.

Many Americans have several credit cards, all with substantial balances and high interest rates and monthly payments. A non profit debt consolidation company negotiates with each creditor to reduce interest rates and monthly payments. After getting the best deal possible for the consumer, the non profit debt consolidation company totals the monthly bills, so that the consumer only has to write one check to the non profit debt consolidation company. The company then distributes the payments to the different creditors.

The good ones offer financial counseling and assistance with budgeting so that the consumer does not find him or herself right back in the hole.

Are There Any Problems with Non Profit Debt Consolidation Companies?

Unfortunately, yes. As with any other type of business, there are good companies and bad ones. The good ones will help you get and stay out of debt.

The bad ones will pocket your monthly payments to fill their own coffers. Your understandably outraged creditors won't see a cent of the money, or if they do, they will receive far less than the agreed upon amount. The creditors will then take out their anger on your with harassing phone calls, negative reports to credit agencies, etc.

How Can I Tell the Difference Between a Good and a Bad Non Profit Debt Consolidation Company?

The Federal Trade Commission website offers excellent information on separating the wolves from the lambs. In general be wary of any company that uses high pressure sales techniques or charges exorbitant "up front" fees or donations.

Debt consolidation is not for everyone. Before starting you on a debt consolidation plan, the company should offer you credit counseling to get a full picture of your income, spending habits, financial strengths and weaknesses, etc. Any company that automatically wants to place you on a debt consolidation plan is suspect. Ask the company upfront if they will keep a percentage of your monthly payment and what that percentage is for. Ideally all the money you pay monthly should go to your creditors.

Finally, just because the business advertises itself as non profit does not necessarily mean it is honest. Many illegitimate "non profits" charge exorbitant "donations" to use their services. Getting in with the wrong debt consolidation company can cost you your credit rating and your peace of mind. Do your researches carefully to make sure the company you are working with have your best interests at heart.

Next article: Consolidating Your Debt Help Tips and Guide