A non-profit debt consolidation company will typically try to get rid of interest rates altogether. A good portion of the companies will negotiate directly with the credit card companies to get things where they need to be.
Credit cards are not bad in their essence; they give consumers purchasing power they might not otherwise have access to. However, they only benefit the consumer who uses them responsibly. If they are used irresponsibly, they can be the downfall of a consumer. Some people will spend and spend- only to find out they cannot afford to pay the money back, even with minimum payments. Thankfully, there are nonprofit organizations that can help these individuals avoid the frightening prospect of bankruptcy. These companies work with the individuals to set up one monthly payment that will go towards paying off all of their debts.
This functionally translates into the consumer paying off one loan with one interest rate. Typically, the payment plan and interest rates with the consolidation loans are far better than what they would otherwise face by paying off their debts on an individuals basis. Interest rates charged by credit card companies can be insanely high, and if you have more than one card with high-interest rates, it is easy to find oneself in a lot of financial trouble.
Non-Profit Debt Consolidation can be the Light at the End of the Tunnel
The individuals who find themselves over their heads in credit card debt are not bad people. They aren’t trying to cheat the system, but rather lost control of their financial decisions. While they might not have been the most responsible people initially, non-profit debt consolidation can give them that opportunity to reclaim their responsibility. The non-profit debt consolidation companies offering these services can also dispense valuable advice on how to avoid a similar situation in the future and plans for financial health. It is up to the consumer to take advantage of such an opportunity.
That does not mean that this process is a free pass. There is a multitude of rules and restrictions that must be met to even qualify for the services. You must close your credit card accounts from being able to make any new purchases, and you cannot sign up for any more credit cards until everything has been paid off and bankruptcy is no longer a realistic fear. The exception may be business people who need a credit card for their business transactions. Even these cards are closely monitored and restricted. The counselors at these firms will do everything they can to help the consumer through these circumstances.
Non-Profit Debt Consolidation Companies
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. Nonprofit 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 has 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 a Nonprofit help with?
Often, the divisors 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 below 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.