If you’re an American today, on average, you’re likely to have over $4000 in credit card debt. There’s also a 1 in 4 chance that you have at least one card that’s maxed out. Credit is the most popular form of currency in today’s day and age, but it’s getting us into trouble. Non profit debt consolidation companies can help you get a leg up.

What do Non Profit Debt Consolidation Companies do?

Most Americans have several credit cards. A good amount of them have a large amount of debt racked up, with high monthly payments and astronomical interest rates. The task of non profit debt consolidation companies is to contact the institutions that the creditor owes in order to negotiate lower payments and interest rates. Once all that is said and done, the company reports to the consumer to let them know how much will be owed on a monthly basis. The customer writes the check, and the company then disperses the monies to the different lenders.

What else can they help with?

Often, the advisors at these non profit debt consolidation companies will counsel the consumer on how to avoid similar financial straits in the future, and provide strategic financial planning for years to come.

What’s the downside?

Not every debt consolidation company is honest. Some of them will ask for a certain amount, and then take out a large chunk for themselves in administrative fees. The result is that the institutions that have lent you money are receiving well bellow that they had demanded, and begin to call you angrily, demanding the additional funds. They may also submarine your credit rating further by making negative credit reports.

Differentiate between Non Profit Debt Consolidation Companies

The Federal Trade Commission website offers a good set of tips for making sure the company you select to help you in this time of need is in the business for the right reasons. As a rule of thumb, you should avoid those companies that are asking for a large amount of money upfront, they will not help you in your path to becoming debt free. 

Debt consolidation is not the best choice for every consumer, and a good company will know that. These firms will have a consultant sit down with you to give you a detailed breakdown of your finances and the weaknesses therein. If a company fails to do so, and offers to take you on immediately, a red flag should immediately go up.

Also, ask the company if they plan on taking any portion out of your monthly payments and for what purposes. The consultant that launches into a convoluted explanation typically has something to hide. The correct answer will be that all of your monthly payment will go directly to your creditors.

No matter what, don’t be deluded by the term non profit preceding a name. This does not mean anything, and unless you’ve seen their tax records, can be entirely untrue. Doing your homework on the company you select is the only way to keep your good financial name safe.

 

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