The Truth Behind The Non Profit Debt Consolidation Company

Having large amounts of debt is a scary prospect.  Having large amounts of debt that you can’t afford to pay off is even worse.  In our current economy, not only are people accumulating debt just to pay for the mundane such as household bills, but with high unemployment rates, people are also struggling to pay for this debt.  This eventually makes a person ask, “What can I do about all this debt I have accumulated?”  For many people, things haven’t gotten so bad that bankruptcy is an option, so what else is left?  One option for some may be a non profit debt consolidation company.  However, aside from the low-budget commercials and mail flyers, the average consumer knows very little about these companies and how they work.  Are they truly a viable option for those drowning in debt?

At their most basic, non profit debt consolidation companies work like this: A consumer calls the debt consolidator and hands over their credit information.  With this information, the non profit debt consolidators then call the consumer’s credit card companies and negotiate a lower interest rate.  They then contact the consumer and explain their new negotiated payment plan, which usually includes a “donation” added to the payment, which goes straight to the debt consolidation non profit company.  The rest goes to the creditors.  Depending on how much debt the consumer is in, they could be paying off their creditors for a short period of time, or a number of years.  However, while the debt is being paid off, any credit cards included in the negotiated plan are shut off, and then usually closed once the debt is gone.

At this point some people might be thinking, “sign me up!”  After all, most services come with fees, and it’s worth it to stop the creditors from calling and the stress from building up, why wouldn’t someone do this?  Well, for starters, because you can do it yourself, without the fees!  It takes a little research, and it can be scary, but anyone can call a credit card company and negotiate a lower rate and payment plan, being a non profit debt management company does not give you special VIP. access to these things.  Most creditors would rather get some money than no money at all, and especially with the current economic state of affairs, creditors are very willing to work with consumers.

Another reason why it might be best to avoid these non profit debt management companies is because there are a number of them out there that are not reputable.  There are lots of companies that offer non profit debt counseling to scared, desperate consumers who will do anything to stop the debt collectors from calling.  Instead, all these consumers get are massive fees tacked on to payments that somehow never end up getting to their creditors.  The money is gone, along with the additional fees, and the creditors still want their money.
 
Does this mean people should avoid non-profit debt management companies all together?  Not necessarily.  If negotiating with creditors is too daunting of a task, and paying a fee to have someone do the heavy lifting is worth it, then debt consolidation may be a good route.  However, a savvy consumer will thoroughly research the company they are interested in, including checking them out with the Better Business Bureau.  (http://www.bbb.org)  Overwhelming debt is not fun for anyone, but fortunately there are ways out, and a legitimate, reputable debt consolidation company might be the right path for you.