Non-Profit Credit Counseling
With mounting debt problems for America's consumers, many are increasingly hearing the terms "non-profit credit counseling" or "non-profit debt consolidation." Non-profit debt relief or non-profit credit counseling are similar to their "for-profit" debt relief "cousins" and thus, offer similar services.
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Due to federal regulations, service fees are paid ONLY after debt relief benefits have been achieved. No more upfront fees and no more upfront charges for people seeking debt relief from "non profits" and their "for profits" counterparts -- unless you are getting debt relief via an attorney and had a face-to-face meeting. Regardless of how a credit counseling company is positioned, the over-riding concern for consumers riddled with debt, should generally be the level of performance offered, the solutions given and how quickly debt will be reduced or paid-down.
Consumer Credit Counseling
Consumer credit counseling agencies can generally help many consumers pay-off unsecured debts at a more predictable pace. While non-profit credit counseling enrollment is often noted on credit reports, it could have some negative short-term impact as debt gets paid-down on a predictable timetable. However, as debt-level to credit-limit ratio improves, credit scores should, over time, begin to improve--especially with on-time payments made month after month.
Credit counseling agencies generally operate on a simple and direct premise: Make the monthly payment affordable, lower the interest rate, waive fees and penalties, and consolidate unsecured debt. It can be a win-win strategy for both the consumer and credit card companies.
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Non-Profit Bankruptcy
Bankruptcy, as a form of debt relief, can provide many consumers struggling with debt a fresh start. Like their for-profit counterparts, the non-profit moniker is a business and tax-code classification which, among other things, helps those companies support efforts at educating the consumer and potentially lowering fees for consumers seeking these types of services. Many non-profit bankruptcy are qualified and skilled at bankruptcy advice, and providing necessary paperwork. Many score high marks among consumers for levels of professionalism and results delivered. Low-income bankruptcy candidates may even qualify for waivers related to pre-petition fees if low income qualifications can be met.
Debt Settlement Companies
Generally, debt settlement companies offer the following services:
- Help the consumer negotiate for less than the full amount owed with creditors.
- Help provide the consumer in financial distress with a viable alternative to bankruptcy.
While debt settlement companies are often successful in negotiating settlements for clients for less than the full amount owed, it should be noted that initially stopping payments to credit card companies will typically result in negative credit reporting. Credit scores are affected and lawsuits can occur during this period. It's equally important, however, to note that credit card companies understand that it's often in their best interest to accept the new terms sought by debt settlement companies. The old adage: "That something is better than nothing" - should a debtor decide to go bankrupt - is a reality credit card companies are keenly aware of.
The bottom line is, many consumers have made debt settlement a popular alternative to bankruptcy. It could save a substantial money for the consumer, and the negative effects to a consumer's credit when using debt settlement are still less severe and long lasting than bankruptcy. Bankruptcies typically appear on a consumers' credit history for 10 years. Regardless of which debt relief option you choose,it is important to understand that no debt relief solution make debts magically go away. If you are on a debt management program through a credit counselor, you are still responsible for having money available each month for the monthly payment plan. If you are on a settlement program, it is also up to you to save up funds, over an extended period of time, and use them to make a settlement offer later.
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