What makes non-profit debt consolidations different?

Most companies exist to make a profit. There is nothing wrong with that, except that for them to make a profit, someone else has to pay. And when you’re drowning in debt, you cannot afford to pay.

Non-profit organizations are different. They aren’t driven by profit. They provide a service to society. Their mission is not to make money; it’s to reduce your debt. They provide financial counseling and other services to people who may not be able to pay a lot of money for financial advice. That is not to say that they are free—many do charge fees—but the fees are lower than in the for-profit sector.

Non-profit companies enjoy certain tax advantages. This has led to some unscrupulous organizations claiming non-profit status simply to get out of paying taxes. Avoid these companies like the plague. If they are cheating the IRS, they are more likely to cheat you.

What to expect from a non-profit debt consolidation company

Before you approach a debt consolidation company, take some time to organize your finances. That way you will know exactly how much you owe and to whom. Note the different interest rates that you’re paying on your debts. Credit cards tend to be among the costlier debts. Car loans and mortgages usually have much lower APRs.

Debt consolidation companies can do two things. They can arrange a low-interest loan for you that you can use to pay off your expensive debts, thus saving hundreds of dollars a year. The companies do not lend the money themselves, but rather work as a middleman between you and a lender.

They can also negotiate with your creditors on your behalf to create a payment plan that you can afford. This should stop all those harassing debt collection calls. Technically, you can do this yourself. However, debt consolidation companies have much more experience in these matters and usually get better results.

The final results depend on your specific financial circumstances. You can expect lower monthly repayments and a reduction in overall debt. However, the company will not be able to erase all of your debts, or instantly fix your credit history.

Video: Understanding Debt Consolidation

What fees will you have to pay?

Even if the debt consolidation company is non-profit, they may still charge you fees. There’s often a small fee for the initial consultation, plus monthly fees for the duration of time that you use the company’s services. This money is used to cover the company’s daily expenses, such as salaries. Just because the company is non-profit, doesn’t mean that the staff work for free. In general, non-profits usually charge smaller fees than for-profit companies, though this is not always the case.

Watch out for scams

Just because a company claims to be non-profit, it doesn’t necessarily mean that it has your best interests in mind. There are many dishonest companies that prey on financially vulnerable individuals. The best way to avoid scams is to know what to look out for.

Do your research. Is the company a member of a reputable association? Is it endorsed by the Better Business Bureau? If the answer is no, you will need to be extra careful. The Better Business Bureau can tell you whether or not there have been complaints about this company. Multiple complaints are a major warning sign. Take them seriously.

Most debt consolidation companies exist only online. You cannot walk up to an office and speak to a human being. This does not, in itself, make them untrustworthy. After all, huge companies like Amazon don’t have an off-line presence. But it does mean that you will need to check thoroughly that they are legit. Do this before you hand over any personal details, or you may expose yourself to identity fraud.

Does it all sound too good to be true? Some companies promise you the world, but will never deliver on those promises. They trade on unrealistic expectations. Do not believe everything they tell you. There are no financial miracles. If it sounds too good to be true, it probably is.

Look out for hidden charges. Some companies claim to offer their services for free, then hit you with all sorts of fees. Read all of the fine print before you sign on the dotted line.

Video: Debt Consolidation Loan - What You Need to Know

Non-profit debt consolidation companies

Advantage Credit Counseling Service, Inc.
Pittsburgh, PA
866-699-2227

American Credit Foundation
Midvale, UT
800-259-0601

Aegis Debt Consolidation
Fairfield, CT
203-438-7275

American Consumer Credit Counseling
Auburndale, MA
800-769-3571

American Debt Solutions, Inc.
Boca Raton, FL
800-246-4019

CCC
Silver Spring, MD
800-388-2227

Community Credit Counseling Corp
Colts Neck, NJ
800-663-4416

Consumer Credit Counseling of Western PA
Pittsburgh, PA
888-511-2227

Consumer Credit of Des Moines
Des Moines, IA
800-955-5765

CuraDebt
San Diego, CA
877-850-3328

Debt Management Credit Counseling Corp.
Deerfield Beach, FL
954-414-9339

Debt Free Christian
La Mirada, CA
800-624-9747

In Charge Debt Solutions
Orlando, FL
888-595-9404 

Springboard
Fresno, CA
877-947-3752

United Financial Systems
Margate, FL
561-883-2398