Non-Profit Debt Counseling Help

Large amounts of debt, coupled with compounding interest charges, leave consumers feeling trapped and helpless. There are options to getting out of debt, however. Nonprofit debt-counseling agencies help consumers create budgets, pay down outstanding debt, and avoid future debt.

Benefits

Nonprofit debt counseling agencies help consumers build payment plans for credit card debt. Consumers satisfy the debt, using payment plans that could take several years. Most of these agencies provide the debt counselors to work with consumers to develop a repayment plan specific to their needs. Many agencies also offer free financial courses for customers.

Fees

Most nonprofit debt counseling agencies charge fees for their service. Although some credit counseling agencies offer a free consultation for potential customers, customers are required to join the credit counseling service to obtain a detailed debt management plan. Upon signing up, customers in most cases pay a start-up fee. The average charge is about $50 to set up a new account, according to MSN Money. This gives customers access to the agency's services, including a personalized debt-management plan and budgeting courses. Consumers should "rate shop" several agencies to find the lowest fees and avoid those that charge unusually high fees.

Downsides

Credit counseling appears on a consumer's credit reports. Although this will not lower a person's credit score, some lenders may not extend new credit to consumer who are working with credit counseling agencies. However, the credit counseling agency will remove the information from the credit report when the consumer completes a repayment plan.

Tips

Consumers should research nonprofit debt counseling companies beforehand. Determine whether your desired counseling firm is accredited by a third-party evaluation association such as the International Organization for Standardization or the Council on Accreditation. The Better Business Bureau provides a company overview, rating and a list of consumer complaints for many companies in the U.S. Get any required fees in writing before joining.