Erase Credit Card Debt With Non-Profit Debt Consolidation
Credit card debt is one of the most commonly reported sources of financial stress among Americans. Those who haven’t exercised prudent use of their available credit may be left feeling as if they’re drowning in debt. Because credit cards carry such a high-interest rate compared to other types of debt, getting out of debt can seem like a daunting task.
During the 1960s, the US government saw a major spike in consumer credit card debt and decided to offer non-profit counseling services to help Americans become debt-free. These services still exist today and are available to all individuals looking to erase their credit card debt.
Non-Profit Debt Consolidation Defined
Non-profit debt consolidation is an alternative to other debt consolidation strategies that don’t require the individual to take on any new debt. These organizations have close relationships with credit card companies and can negotiate on behalf of the borrower. They usually assist in securing lower interest rates, freezing collection efforts, and forgiveness of any late fees or penalties incurred.
The non-profit looks at an individual's debt level, their income, and their monthly expenses. They will then put together a plan that allows the individual to enjoy a decent standard of living while also putting them on the fast-track to paying off their debts.
Why Opt For A Non-Profit Debt Consolidation Company?
Non-profit companies offer a variety of benefits that make their services enticing to those in debt.
These are the major benefits:
- Access To Free Debt Counseling: Those that work at non-profit organizations are highly trained professionals. They have a great deal of experience in dealing with creditors and putting together a debt management plan. Having access to these services free of charge is one of the major benefits
- No Conflict Of Interest: For-profit debt counseling services almost always have a conflict of interest as they are motivated to sell products with the interest of making the highest commission. These companies have a history of pushing consolidation loans and other debt vehicles on individuals, even if they are not the right fit for their particular situation.
- Reduced Interest Rates: Non-profit credit counseling organizations have close relationships with credit card companies. This allows them to secure reduced interest rates and fee waivers for their clients to a greater degree than for-profit consolidation companies can
What Types Of Debt
These non-profit entities deal exclusively with unsecured credit card debt, meaning they can only help with the following debts:
- Credit card debt
- Department store card debt
- Medical credit card debt
Non-Profit Debt Consolidation Vs. For-Profit Debt Consolidation Companies
There are many reasons why an individual would prefer to use a non-profit organization over a for-profit consolidation company.
- Higher Trustworthiness: For-profit credit counseling agencies have a reputation for being organizations of ill repute, offering clients debt reduction products that have little to no benefit to the debtor
- NFCC Members Must Comply With COA Standards: Unlike for-profit companies, non-profit credit counseling agencies must be accredited by the COA, which requires them to follow rules set out by the Federal Trade Commission. These rules are set in place to ensure the consumer is not taken advantage of. For-profit organizations are under no obligation to follow these requirements
- Lower Cost: Because non-profit groups are not making money on the plans they provide, it results in a lower cost to the individual. For-profit companies are almost always more expensive because they are not covered under section 5019(c)(3).
Guidelines For Non-Profits
As mentioned above, reputable non-profit organizations include National Foundation For Credit Counselling (NFCC) members that must comply with COA standards. These standards are focused on promoting productive and responsible credit counseling services.
It also forces members to comply with the following set of standards:
- Must be bonded, licensed, and insured
- Must apply for re-accreditation every 4 years
- Subjected to a yearly audit
- Required to meet all consumer protections outlined by the Federal Trade Commission
- All services must be made available to consumers, regardless of financial situation
What To Consider When Choosing A Non-Profit
When choosing a non-profit organization, one should ensure that they are an accredited NFCC member with good standing in the organization.
Make sure that they can help with the following:
- Consolidating all credit card bills into a single monthly payment
- Stopping of all collection efforts
- Eliminating late fees and overage charges
- Monthly payments that are automatically debited from one’s account
- Helping you set up a realistic plan and budget
Additionally, you should only be charged a single monthly fee of $25-$30 and nothing more.
It is important to choose a reputable and accredited non-profit organization as the debt consolidation world is rife with scams and opportunists. Moreover, erasing one’s credit card debt is not an easy task, and high-interest rates, large balances, and limited income can make it very difficult.
Fortunately, non-profit services can provide individuals with a strategic and realistic debt reduction strategy with lower interest rates, reduced or waived late fees along with the cessation of any collection actions.