Life Insurance Blog: August 2009

Non profit debt consolidation services are offered by companies that have received non profit status from the IRS. The non profit status doesn\'t mean that they offer free services. But such companies do help you with debt consolidation programs by negotiating with your creditors for a payment plan that you can afford.

What happens when you enroll in non profit debt consolidation?

A non profit debt consolidation company helps you to consolidate debts in a similar way as is usually done by a for-profit consolidation company. The non profit consolidation company reviews your situation through a free debt counseling session and prepares an income and expenditure analysis.

Based upon how much you can pay, the company negotiates with your creditors or collection agency. The company works out a monthly payment plan involving lower interest rates so as to help you resolve your debt problems.
What are the benefits of non profit debt consolidation programs?

The debt consolidation non profit company aims to lower your monthly payments. This can be done by negotiating with your creditors in order to:

* Cut down your interest rates
* Eliminate or minimize late fees/penalty

Apart from negotiation, debt consolidation non profit companies also help you consolidate bills by accepting a single monthly payment. This payment is then distributed amongst your creditors. If it is a non profit credit card debt consolidation program, then the company will also negotiate to reduce or waive off over-the-limit charges incurred on your credit card accounts.

What you don\'t have to do:

You don\'t have to manage creditor or collection calls any more. The debt consolidation non profit company will communicate with your creditors (through letters or on phone) to make things easier for you. For further details, check out the 8 debt consolidation benefits.
How do non profit debt consolidation companies work?

Non profit debt consolidation companies operate with the help of funds received through consumer donations. These include voluntary donations made by debtors and business organizations such as credit card companies, department stores, gas companies and others. In most cases, creditors offer a certain percentage of your monthly payment to the non profit debt consolidation companies.
How to find out if a debt consolidation company is non profit?

The best way to find out if a debt consolidation company has the non profit status is to check its \"About Us\" section. You need to find if there\'s any mention of getting IRS 501(c) (3) non profit charitable organization status. This section of the IRS includes provisions for tax exemption granted to non profit organizations.
How to avoid scams in non profit debt consolidation?

There are some debt consolidation non profit companies, which function as scam artists. Such companies make attractive offers and false promises just to deceive innocent debtors and extract more money from them. Here are the 2 things you need to do in order to avoid such scams.

* Be careful while revealing personal details: You need to be careful about revealing personal details to an online consolidation company. Do not give away important details such as credit card number, any bank account number etc. This is to make sure that the company doesn\'t withdraw money from your account and lead you into trouble.

* Verify how much you need to pay monthly: There are debt consolidation non profit companies which claim to offer free services. But these companies actually merge their fees with your monthly payments, which are sent out to your creditors.

In order to check if at all the company has combined their fees with your monthly debt payments, look through the financial statement sent by your creditors. It\'ll give you an idea as to whether the company is offering free of cost service or in fact charging you more than what you should pay your creditors.

A non profit debt consolidation company may charge you lower fees for their services. They\'ll also offer you free counseling, budgeting tips and money management advice. But this kind of debt help is also offered by a for-profit consolidation company. So, what\'s important is to select the right debt consolidation company, be it non profit or for-profit. The company should be such that it offers services to the best of your interest keeping in mind your situation and affordability.

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