How Does Non-Profit Debt Consolidation Work?
See if debt consolidation from a non-profit organization is right for you.
For those individuals struggling with large amounts of unsecured credit card debt, non-profit debt consolidation can represent a viable path out toward a better financial future. A good non-profit debt consolidation/credit counseling firm will offer an introductory 45-90 minute telephone counseling session to a prospective client during which all aspects of the individual’s financial situation are discussed.
Following this initial counseling session, a debt management plan (DMP) will often be implemented, resulting in one combined lower monthly payment that is made to the non-profit debt consolidation agency who then disburses appropriate amounts monthly to the individual’s creditors.
There are numerous benefits to this process – including lower interest rates and expense, along with the simplicity of making one single monthly payment, as opposed to the arduous task of managing multiple monthly payments to multiple creditors.
But perhaps the greatest benefit of all is that a good non-profit debt consolidation firm can place a debt saddled individual back on the road toward financial wellness with a carefully planned payment schedule that can be met over a period of three to five years. Let’s take a closer look at how non-profit debt consolidation works in practice.
How Do I Find a Good Non-Profit Credit Counseling Agency?
The Federal Trade Commission (FTC) recommends working with a non-profit credit counseling agency staffed with certified debt counselors who can help develop a budget and debt management plan for you following an interview. Visit the Better Business Bureau at www.bbb.org to investigate the track record of the counseling agency, and be sure to verify that there is not a long list of outstanding complaints against the agency and that it is properly licensed.
There should be no hidden fees, and you should avoid any counseling agency that attempts to charge upfront fees – including an application fee, “membership” fee, or any per-creditor fees. You should, however, expect to pay regular monthly fees of approximately $25-50 to your counseling agency for the services they provide related to a DMP.
Should I Enroll In a Debt Management Plan?
A reputable credit counselor will make recommendations for you related to controlling your expenses and enhancing income while also offering free educational materials that can further get you on the right track financially. After evaluating your situation, the counselor may offer you a DMP that would include a reduction of interest rates and monthly payments on your unsecured debt, subject to the acceptance of your creditors.
If you agree to enroll, the duration of the payment schedule will generally be between 36 and 60 months, so this is a process that requires a commitment to getting out of debt for it to truly work.
Once enrolled in a DMP, all of your credit card accounts will be closed (with the possible exception of an “emergency” credit card remaining open) and you will be unable to obtain new credit. The closing of accounts will have an initial negative effect on your credit score, though creditors view enrollment in a DMP as a positive development for your credit profile, as your enrollment indicates a willingness to pay your debts.
Be aware that it is a bad idea to pursue new credit while enrolled in a DMP, as creditors will become aware of any applications for new credit by simply viewing your credit report. This can result in creditors rescinding interest rate and payment concessions that were put into place through implementation of the DMP. Just focus on making regular timely payments to your counseling agency and this will ensure the success of your DMP.
Look For the NFCC Affiliation
Unfortunately, the debt relief industry includes more than its fair share of unscrupulous organizations who won’t think twice about taking advantage of an already financially burdened individual who is merely seeking help and a workable way out of a difficult situation. Scam artists abound who will push inappropriate forms of debt relief while charging unnecessary fees in an effort to boost the bottom-lines of their own for-profit operations.
Therefore, in order to make certain that you work with a good non-profit counseling agency, it helps to look for an NFCC accredited non-profit debt consolidation agency. NFCC stands for the National Foundation of Credit Counseling, an organization founded in 1951 and the nation’s largest and longest serving non-profit financial counseling organization.
NFCC member agencies provide financial counseling services to over a million consumers each year while pursuing its mission of financially responsible behavior on a national level while delivering high quality financial education and counseling services.
Are you in debt? we can help
Time and again, I did not know how to handle my debt
Time and again, I did not know how to handle my debt. Even when I paid my credit cards off, a few months later I was back in the same situation. But this year is different. I contacted United Settlement...
Business debt relief is what I needed when I contacted the United Settlement crew
Business debt relief is what I needed when I contacted the United Settlement crew. They are committed to helping people like me who requires more help with business debt problems. I had several loans out...
Student loan debt was the reason that I reached out to United Settlement
Student loan debt was the reason that I reached out to United Settlement. I had about 200K plus in student loan debt for my business degree. I recognized that I had to do something when I struggled to make...
There is nothing worse than falling ill and then having to deal with super expensive medical bills
There is nothing worse than falling ill and then having to deal with super expensive medical bills that you really do not have the patience or experience to handle. I was pleased with my experience with...
I took out a few personal credit cards to open my boutique
I took out a few personal credit cards to open my boutique. When than money ran out, I went on to take out more loans for my business. However, this quickly turned into a disaster. Today, I now have a mountain...
Who knew that auto loans were so negative for your credit lines
Who knew that auto loans were so negative for your credit lines? Especially, if they are not paid off right away. As a married couple, we had vowed to keep auto loan debt at bay. But, we found ourselves...
I didn’t have a ton of debt when I contacted United Settlement
I didn’t have a ton of debt when I contacted United Settlement, but what I wanted from them was some information about how to handle my debt management. I knew that I needed some more information to get...
Federal student loans were the reason I ended up at United Settlement
Federal student loans were the reason I ended up at United Settlement. I had about $200K to pay back and I was not quite sure where to tackle that debt once I got out of school. But I reached out to that...
Everyone knows how horrible student loans are
Everyone knows how horrible student loans are. For me and my family, they had become more than just an annoying monthly bill. They had taken over our lives. That’s why I decided to take action and find...
I wanted to be more informed about my own personal and business debt
The number one reason I chose to contact United Settlement was I wanted to be more informed about my own personal and business debt. When you have credit card debt, it can be extremely frustrating. Especially...
I cannot believe I was finally able to find a company to actually help me pay off my debt
I cannot believe I was finally able to find a company to actually help me pay off my debt! I thought I would forever be chained to debt. But United Settlement offered me multiple solutions for paying off...
What your money can do for you.
The great reviews that you have thanks.
Dealing with high interest auto loan debt was difficult for me and my wife
Dealing with high interest auto loan debt was difficult for me and my wife. We thought we got a good deal, but it actually was a horrible loan. So, we reached out to United Settlement, and they got to work...
No one really wants to go bankrupt, and neither did my family
No one really wants to go bankrupt, and neither did my family. But fortunately, we did not have to go that route. It was our last resort, but United Settlement helped us figure out a way around bankruptcy...
I had been through about 5 different credit counseling agencies before I found United Settlement
I had been through about 5 different credit counseling agencies before I found United Settlement. I had read through their reviews and made the decision to move forward with them. I also was so impressed...
Save time and money
Just what I needed, already had a company I was working with and I switched because I was able to same some money. Brian and Alfred were really nice and helpful
As a business facing some unwanted financial difficulties
As a business facing some unwanted financial difficulties, we were at a loss for what to do next when our debt started to soar. We took a closer look at our financial situation by contacting United Settlement....
I had no clue how to create a debt management plan
I had no clue how to create a debt management plan and in fact, I didn't even know what a debt management plan was. Fortunately, I reached out to United Settlement before I had too much debt to tackle....
Being burdened by debt is one of the biggest struggles we faced as a family
Being burdened by debt is one of the biggest struggles we faced as a family. But these people at United Settlement were very helpful in deciphering the different debts we had and then coming up with a debt...
Student loan debt was my worst enemy before I ran into United Settlement
Student loan debt was my worst enemy before I ran into United Settlement. I really thought I would just have terrible credit for the rest of my life because I will never get out from underneath it. It was...
- Credit Card Debt
- Credit Card Relief
- Credit Card Guide
- Credit card interest rate charges
- Credit and loan plans
- How To improve Your Credit Score
- Too much credit card debt
- Solving Your Credit Card Debt Problem
- Credit Reporting Agencies
- Credit Card Interest – Tax Deductable?
- Disputing a Credit Report
- Credit Card Balance Transfers
- How To Get a Free Credit Report