Debt relief is no longer an unknown term for consumers in the US. The recession has transformed United States from a creditor nation to a debtor nation. There is a lot of hue and cry about debtors rushing to debt help centers to get out of debt. One category of debt help firm that has become prominent over a period of time is the one that calls itself “non-profit”. Whether you opt for debt settlement or a debt consolidation non profit option, the main objective of these debt solutions is to help you get rid of debts.
Most of the debtors are taking professional help for managing their debts better. Of late, the debt settlement and debt consolidation firms have come under increased scrutiny especially if they are non-profit in nature. This is because the “non-profit” status of these companies is raising eyebrows. Studies reveal that the debt consolidation non-profit and debt settlement companies (non-profit) are earning more than the companies that are for-profit in nature!
In a debt settlement program your creditor reduces your debt load by allowing you to pay much less than you owe. The debt settlement firm you hire negotiates with your creditor for the same. When you have accumulated half of what you owe, negotiation begins. For a short while you make payments into a trust account instead of paying your creditors directly. The debt settlement company will charge fees (if it is for-profit) or may not charge fees (if it is non-profit).
Similarly, in debt consolidation non-profit program, you condense your debts into one. The debt consolidation company will negotiate with your creditors for lower interest rates and payments.
Recently, many unethical activities of these debt help companies have come to the limelight. Reports state that if you are not careful enough, the debt consolidation non-profit, debt settlement and credit counseling firms may dupe you in the following manner –
- If they offer their services for free, they may ask you to pay some cash as “donation”. The non-profit debt relief companies operate with donations they receive.
- They may pocket part of the cash you give them to pay off your creditors
- Often they may refer you to other companies offering debt help and those who are for-profit in nature. In the process they enjoy “kickbacks”
You cannot allow your cash to go in waste especially when you need it the most. Given the fact that debt consolidation and debt settlement are debt solutions that serve as bankruptcy alternatives, you cannot avoid these debt help options especially if you have debts to tackle. But there are ways in which these debt relief options can work for you provided you do your bit of homework and select the debt settlement or debt consolidation non-profit company that will be of genuine help to you.