If you're drowning in debt, it can be difficult to know which step to take next, or who can help you to make financial decisions. There are plenty of companies that refer to themselves as free nonprofit debt reduction specialists, but knowing which ones you can trust can prevent you from making mistakes that can result in deeper debt and destroyed credit.
Nonprofit Debt Counseling Services
The phrase "nonprofit" in front of an organization's name can give you a false sense of security. Just because a company is nonprofit does not mean the services it provides are free, or even low cost, and nowhere is this more evident than in the debt reduction and debt counseling world. Plenty of credit counseling companies advertise themselves as "nonprofit," but for the consumer, this is an empty claim; while they may not turn a profit, per se, they are in the business to make money through fees for their services.
Buyer Beware
The claims made by nonprofit debt reduction companies are tantalizing. Often, these organizations offer to help you settle or reduce your debt, while minimizing the cost to you. While these organizations may or may not advertise their services as free, the financial reality is often buried in small print or included in the payments you will make toward your debt by way of payments to the credit counseling agency. In the end, the service you thought was free or low cost ends up costing you more than you bargained for.
Finding Free Nonprofit Debt Reduction Help
Consumers can find free help with debt reduction without fearing companies that make misleading claims. The National Foundation for Credit Counseling can help you find a reputable credit counselor in your area that can provide you with debt help that may be free, depending upon your financial status. In most instances, even if the debt reduction help offered by reputable credit counseling agencies is not free, it is reasonable enough that you can fit it into your budget.
How Debt Reduction Plans Work
A reputable credit counselor will work with you to determine whether it would be best for you to negotiate with your creditors by yourself by asking for lower payments, or whether you are a candidate for a debt management plan. If you qualify, the credit counselor will work with your creditors on your behalf to reduce your payments and or interest and come up with a repayment plan that will allow you to be out of debt in three to five years. Often, these plans come with a small fee attached; however, if you qualify, the agency may waive your fees.
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