Working With a Non-Profit Debt Consolidation Company

There is a long list of debt consolidation companies advertising services to consumers who are struggling under the weight of debt. These debt consolidation companies all offer their services using different methods and not all consumers will be eligible for assistance from all consolidation companies. When researching assistance options, consumers need to review several different companies and decide on which will be most beneficial for their individual financial situation.

The Non-Profit Difference
One key difference consumers will note when looking at debt consolidation companies is that some are referred to as non-profit businesses. Essentially, the non-profit stamp stems from the approval of the IRS giving the company a non-profit status. Many people will mistakenly assume that debt services offered by a non-profit consolidation company are free. However that is not the case. The non-profit consolidation companies do offer consolidation programs by negotiating terms with creditors that a consumer can afford.

A non-profit’s debt consolidation programs work similarly to a for-profit company in that the counselors will still create a consolidation plan for you that includes free counseling and budgeting resources. They will figure out how much you can afford to pay and then will negotiate with creditors or collection agents to work out a monthly payment plan with lower interest rates that will allow you to pay off your debts in a more manageable fashion.

The Advantages of Non-Profit
Since the non-profit debt consolidation company’s goal is to enable you to make more manageable payments to pay off debts, there are some advantages to their programs you may not find with other debt consolidation companies. Namely the fact that the negotiating process will help reduce your interest rates and typically eliminates all of your late fees and penalty charges.  It is also very beneficial for many consumers who will only have to make one single payment towards all of their debts each month. The single payment will be divided out among the creditors each month.

Another advantage of using non-profit debt consolidation programs is that it eliminates calls from creditors and collection agencies. The debt consolidation company will take change of all communications once you have enrolled in the program. This can help alleviate the additional stresses while overcoming debt.

Why The Non-Profit Status?
Non-profit debt consolidation companies use funds that have been donated from debtors and business organizations such as credit card companies, gas companies, and department stores. As a general rule, most creditors will give a percentage of the consumer’s monthly payment back to the consolidation company. You can find out if a debt consolidation company is indeed non-profit by checking out their website and looking for references to an IRS 501 ( c) (3) non-profit charitable organization status.