Nonprofit Debt Consolidation

Choosing a nonprofit debt consolidation agency to consolidate your debts is the first preference of most consumers.  There is however, very little difference between a for profit and a nonprofit agency.  The services they both provide are basically the same.

• They both offer a debt consolidation loan to repay your numerous loans with this single loan.
• They both have experts to negotiate lower interest rates and/or monthly payments
• They both can even eliminate debt by getting your creditors to reduce the amount of your loans

CREDIT COUNSELING

Of course, the nonprofit debt consolidation agency does not provide it's services for free. in return for all helping you reduce your interest rate, monthly payments or amount of debt they are also providing you credit counseling.  It is this consumer credit counseling service that they are really getting paid to perform.

CREDIT COUNSELORS

The credit counselors of the nonprofit debt consolidation agency earns a percentage of the monthly payment they negotiate on your behalf. A nonprofit agency will pay your creditors each month and keep a small percentage of your payment and sending the remainder to your creditor. They build their fee into the savings they negotiate for you.

The credit counselors of the for-profit debt consolidation agency will charge you a fee of between $29 to $69 per month (depending on the number of creditors the agency has to handle for you) and you pay that to the agency each month. This fee is in addition to the negotiated savings payment.  

The difference between the total amounts you pay to the agency and your debtors between the two types of agencies is very, very small and may not differ at all.

CHOOSING THE BEST DEBT CONSOLIDATION AGENCY

Choose wisely. Just by having nonprofit all over their advertisements does not mean that you will get a better deal.  You will get the same monthly payment and interest reductions from both types of agencies. Some agencies may claim to be non-profit but and thus in your best interest as they are suppose to be impartial and unbiased.  However, we have seen some agencies that advise on getting a consolidation loan without reviewing the interest rates of your existing debt. The new single payment loan sometimes can have a higher interest rate than your current loans. 
The difference is in the reputation of the individual credit counselor.  Interview a couple of potential credit  counselors to help you choose the best one that you feel comfortable with and has programs that seem reasonable.  If it is too good to be true...it always is!

There is no easy way out and debt consolidation will take effort on your part.  It is this commitment that makes the plan work and gets you out of debt.  You should take it upon yourself to get debt consolidation quotes from different companies, and to compare these quotes with your credit counselor.

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SELECTED ARTICLES AND RESOURCES

Non-Profit Debt-Consolidation Companies
By : Stephen C Campbell (MBA, MSc)

Debt consolidation companies are often thought to be only focusing on debt consolidation. But there are several other services that these companies offer in which you can take advantage. It is important to discuss these major other services to get a total financial picture.


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