Non Profit Debt Consolidation - A Boon or Bane?

There are many debt consolidation companies claiming to make you debt free within a very short time span. Such slogans often appear on the “mission” list of many debt consolidation companies. These promises may or may not be authentic and you need to investigate the authenticity of these companies before you hire their services. Debt consolidation companies charge fees for giving you a debt free life. nnAnother category of debt consolidation companies call themselves “non profit” debt consolidation companies. These companies usually derive their revenues from “donations” they get from different quarters. While some of the non profit making companies do not charge any fees, there are few who ask for a very nominal fee. As far as the reliability of these companies is concerned, not all of them are scammers. You can go through their past records and see whether they can be relied upon. nnConsolidate your debtsnIf you have selected debt consolidation as your financial option for getting out of debt, you have to consolidate or merge all your debts into a single debt account. The non profit debt consolidation company will talk to the creditors and work for you till you become debt free. A repayment schedule is worked out for you with a more favorable rate of interest. Since the interest rate goes down so does your monthly payment. In due course you get out of debt. Eventually you stop receiving harassing calls from creditors or collection agencies. In other words, you are able to manage debts in a more organized and systematic manner and your credit score increases over time.nnNon profit debt consolidation scamsnRecently, there have been a lot of scams involving the non profit debt consolidation companies. Reports suggest that debtors have complained to the state Attorney General and the Better Business Bureau requesting them to look into the matter as the number of fraudulent activities involving non profit companies have escalated over the past couple of months. Some of the common complaints are that despite making payments, the creditors fail to receive any payments or receive a much lesser amount. It is being said that a major portion of the payments made by the debtors actually go into the pockets of the officials at the seemingly non profit making companies. nnExperts are of the opinion that if you are not confident enough about hiring the services of a non profit making company, you can try to opt for a self repayment plan. In this you gather information about all your debt accounts and note down the outstanding balance of each. Work out a budget and take control of your finances in accordance to that. If you are not sure of the debt relief program you should opt for, take help of a credit counselor who can guide you to choose the appropriate debt solution as per your current financial status.