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Non-Profit Debt Consolidators Are Better For You
There are important benefits to finding a non-profit debt consolidator, many of
which will affect your pocketbook directly.
By definition, a non-profit organization is one in which there is a social, educational,
medical or religious mission. It is then registered with the IRS and is exempt from
taxes. Many organizations call themselves nonprofit but do not have that status
with the IRS. They claim this status because all income they take in goes out in
wages and expenses, leaving nothing at the end of the year. In the strict sense
of the word, they are non-profit, but they do not necessarily have that status with
the IRS.
Many debt consolidation companies state they are non-profit, even though they are
not registered with the IRS. This does not mean that they are scammers or that they
are not providing excellent consolidation services. You have to be the judge of
this through your own investigation.
Generally speaking, a non-profit debt consolidation company will offer the following:
- Their fees will generally be less than for-profit companies. Be certain to compare fees when shopping for the best fit for your needs. Fees will be in the form of additional interest paid on your consolidation loan, or an amount added to your monthly payment, to cover their costs.
- The vast majority of non-profit consolidation companies will offer some form of counseling and follow-up assistance to prevent debt difficulties in the future.
- Genuine non-profits tend to be willing to try methods other than bill consolidation loans if at all possible. Often, a client really needs advice on how to eliminate the debt himself, by concentrating on one debt at a time and making minimum payments on all others. An ethical debt counselor will look at all options and advise based upon the client’s best interest rather than just profit.
- Sometimes, non-profit consolidators have access to loan sources which charge less interest than most. This is obviously a plus for the consumer! A savings of 1 to 1 1/2 per cent interests over the life of a loan is considerable.
- Non-Profit consolidators often have better luck in assisting debtors with bad credit. Since those with low scores usually cannot qualify for standard loans, many non-profits use alternative sources quite successfully. If they are registered non-profits, for example, there are pools of grant money available for such purposes, and interest rates can be considerably lower.
By all means, you should try non-profit consolidators first. Shop their fees and interest rates, ask the right questions, and the benefits will be worth it.
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