Michael Brazier

Non-Profit Debt Solutions With Certified Credit Counselors



Posted: Wednesday, November 04, 2009

by Michael Brazier
freedom debt management

Currently, the average consumer  has a credit card with a credit line of at least $4000 and about a quarter of  Americans admit to maxing out at least one credit card. Obviously, people are in  need of simple solutions to sooth the burdens of being buried in debt. A  non-profit debt consolidation program can very well be the answer most consumers  can look to and afford for debt relief.

The average consumer today  carries about 3-5 credit cards, each with their own outstanding balance,  creditor terms and fees, due dates, and varied billing cycles. A non-profit  debt consolidation organization negotiates these terms with each individual  creditor to reduce interest rates, stop late, past due, over limit fees, and  usually a lower monthly payment. In obtaining the best rates for the account  holders, the non-profit org consolidates all the accounts into one monthly  payment and the account holder then sends one payment each month to their  consolidation agency. 

This allows the consumer the  following benefits:

     
  1. Convenience of one monthly payment with  a due date specified by the client.
    2.  
  2. A reduction in interest to a lower,  fixed rate so that the debt can be paid back within a five year time frame, allotting  the majority of the monthly payment each month to be applied to the principle  balance versus the creditor fees.
    3.  
  3. Relief from harassing collection calls  and creditor harassment.
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  4. Re-aging of accounts |certain creditors  only |after a specified amount of time so the consumer can begin to report current  |if they were past due | without paying the additional late fees.
    5.  
  5. Consecutive timely monthly payments to  help improve credit rating over time.
A true non-profit organization  begins their consultation with a free budget counseling session outlining and  assessing your debt to income ratio on a monthly basis and reviewing assets  versus liabilities. Some creditors require this information for enrollment in a  consolidation program and others even base the interest reduction on said  information. A non-profit agency usually receives better rates with the  creditors on behalf of their clients as creditors acknowledge the educational process  of the consultation and appreciate the non-profit ensuring a client not only  understands their financial obligations, but ensures the programs success with  the budget analysis, qualification process.

  The mission of a good  non-profit is not to charge you exorbitant fees for their services, but to get  you out of debt and provide free educational information to ensure consumers do  not make the same mistakes in the future. Remember that class in high school about  how to manage credit card debt? Neither do we, because it didn't and still does  not exist to this day. The American consumer is only partial to blame, so don't be  too hard on yourself. And remember, you certainly are not alone in this credit  debt debacle.

Here are a few good tips when  shopping for a debt consolidation service.

     
  1. Check the company out on the Better  Business Bureau. You can usually search for a business by zip then name of the  organization.
    2.  
         
    1. Are they listed with the BBB?
      2.    
    2. What is their BBB rating?
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    3. Do they have complaints?
      4.  
     
  2. What type of fees do they charge for  their service?
    3.  
         
    1. Does the first payment go out to the  creditors? Every payment less their nominal monthly fee should go out as  received and cleared from client.
      2.    
    2. How much is the monthly service fee?  This really should not exceed an average maximum of $5 per account enrolled.
      3.    
    3. Are there any pre-payment penalties if  you are able to pay the debt off early? The answer should be no.
      4.    
    4. Are there cancellation fees? A true  non-profit usually will not charge a fee for cancelling before completion but  most creditors take it as an opportunity to reinstate your original rates,  justifying it as a program default.
      5.  
Debt consolidation is a great  solution to getting out of debt and maintaining a positive credit score. However,  consolidation is not for everyone. You have to be ready to stop spending on  your accounts; credit cards are closed once they are enrolled in the program so  spending on them is no longer an option. In addition, most creditors require  that all accounts be enrolled into the program less one major credit card for  emergencies. No, your Victoria Secret card cannot be left out for emergencies  lol.

 Good non-profits require their  credit counselors to be certified and maintain their certification for  continuing education as creditor guidelines and state practice regulations  change frequently. They are also usually affiliated with an organization like  ISO or AADMO. A true non-profit will also offer free budget help and a free  debt consultation without any consumer commitment until they fully understand  the program and recognize the potential savings to come with the enrollment. For  more information feel free to call 800-905-1563 or visit our website, http://www.freedomdm.org

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