Non profit debt consolidation programs, or debt management programs, are plans that are designed by not-for-profit debt consolidation services to help consumers control their debts. If you are deep in debt there is no other way out but to negotiate with your creditors yourself or hire a firm that knows about debt management.
Even though people often associate the non-profit term with free services non-profit does not mean free. Most non-profit debt consolidation firms ask a fee for their services. As long as you understand the amount of money you will be paying to them over the amount you will need to pay on your debt it usually is still a good deal.
How Non Profit Debt Consolidation Programs Work
Your first contact with a nonprofit debt consolidation company is usually a certified credit counselor. During the first session the counselor will ask about your outstanding debt and monthly income. Based on the information, he or she will suggest various debt consolidation plans with you. You will need to decide on the best plan that suits your financial situation.
An agreement will be drawn up and sent to you. If you agree with the terms, you will need to sign it and return it to the agency. Once you enroll in a debt management program (DMP) the credit counselor will negotiate with your creditors to lower or eliminate your late and over-limit fees as well as reduce the amount of your debt.
During the program you will make one payment each month to the nonprofit debt consolidation company and they will disburse payments to your creditors, based on the agreed upon date and amount. You will receive monthly statements both from your creditors and the debt consolidation company outlining the payments made that month.
However, before you send any money to the debt consolidation company you have to know the exact amount they will charge you to do this service and how to tell if your payments are received by creditors on time. Remember, you hire the company to repair your credit, not make it worse.
Your monthly payment will stay the same throughout the course of your debt consolidation program. When a debt is paid in full any extra money will be used to pay another debt and so on.
Other Benefits of Non Profit Debt Consolidation Programs
During the debt management program you are also encouraged to learn about money management. For example, if the main cause of your debt problems is your spending habits then you need to learn about how to live within your means.
Most consumer credit counseling services have educational materials to help you learn how to set and achieve your goals, how to spend wisely and how to save your money and many more. With the help of one of many reputable non profit debt consolidation programs you’ll get your finances in shape and even change your spending habits and lifestyle.