Non-Profit Debt Consolidation Companies are all Different

Debt Consolidation Updates

Many things can happen in a person’s life that can lead to a heavy debt load. A person’s or family’s ability to keep up with bill payments can be affected by illness, layoffs and poor money management skills. While there are many non-profit debt consolidation companies out there, it can be tricky to wheedle out the sharks from the genuine help. Look specifically at what these various non-profit debt consolidation companies charge for their services – that will tell you whether or not they are really interested in helping you, or just getting rich off you.

Companies that help individuals with a way to consolidate debt into one manageable monthly payment will notify creditors that they are working with the debtor and attempt to negotiate lower payments. Often the non-profit debt consolidation firm is successful and have late charges and interest costs deducted from the total amount due, which will lower the overall debt making the monthly payments lower for the individual.

However, the fees for their service could end up eating away up to 50 percent of the money they are paid by the debtor. As the name indicates, a non-profit debt consolidation firm means that they do not set out to make a profit from their clientele. A client’s monthly payments may include an artificially high account of the services’ expenses so it will appear that they didn’t make a profit off the client.

Check Company’s Reputation Before Handing Over Cash

There are many reputable companies that offer debt relief in an honest effort to help people get out of their financial dilemma. In many cases a loan company or a bank can steer the debtor in the right direction in finding non-profit debt consolidation companies that do not over charge for their services. You may not see specific numbers showing what you pay them, but the amount paid out to creditors should be reduced by the amount that you pay them.

For example, if your monthly payment to the non-profit debt consolidation company is $200 and their fee is $100, that means your creditors are splitting only $100 every month. For the record, you should only be paying 15-20 percent of your monthly payment to the company, so the rest of the 75-80 percent of your monthly payment actually reaches the creditors and helps pay off what you owe. The extent of your ability to pay and your total debt owing are factors that determine your final monthly payment.