Enrolling into a non profit debt consolidation program has huge benefits.
It can even help you save more money from interest charges if you’re working with the right company.
However, as with any debt solution, knowing how to get out of debt also has its own ups and downs. Read more below and find out what the pros and cons are.
The Pros and Cons of Non Profit Debt Consolidation
Pros
1. Credit Counseling is High-Quality
Finding the right non profit debt consolidation company enables you to receive the best credit counseling for your situation.
Since they are a non profit, their services aren’t centered on profit motive and commission through sales.
Some agencies offer several options, such as the debt management program.
Also, credit counselors can find out if you are eligible for a government housing program.
This way, it lowers your monthly mortgage payments.
2. Free or Low Cost Consultation Fees
A non profit debt consolidation agency renders services whether you are or aren’t able to pay fully for the fees and the services.
They usually get their funding from government grants, donations, and creditors.
Compared to most for-profit credit card consolidation agencies, they do not offer products, advice, or services to the company’s advantage but more for the client’s.
3. Helps You in Your Current and Future Financial Situations
The interest rates are lower compared to if you did the payments separately, on your own.
This can be done through one affordable payment every month after combining all your debts which are not secure.
In addition, more cash on hand is available to pay for your other expenses and bills.
The credit counselors also give you strategies to attack the debt head-on and help you avoid getting into more financial dilemmas in the future.
Cons
1. Requires Long-Term Commitment
In order for you to continue availing credit counseling services and be able to get lower interest rates for your payments, you have to be consistent with your payments.
Otherwise, there are consequences which you have to deal with such as being kicked out of the program.
This means disabling any agreements which you and your creditors have made such as lower interest rates or waiving of late fees.
Then you have to start again dealing with your creditors.
Also, your interest rates will jump back to its high rate before you entered the program.
2. Some Companies Are Not Legit and Are a Scam
6 Debt Consolidation Traps to Avoid https://t.co/DXUrHy83vM
— Jaco Alberts (@JacoAlberts1) September 6, 2017
There are cases of agencies taking advantage of their non profit status.
They refer to their company as local, yet operate in another country.
These companies also charge high fees and provide a plan for a short period of time.
This means they did not review your expenses well enough.
You can avoid these companies by checking in with the Better Business Bureau if a company has a rating which is satisfactory.
For more on non profit debt consolidation, here’s a video from CNN:
Picking the right non profit debt consolidation company to help you get out of debt can be daunting.
However, reviewing the pros and cons, as well as by doing more research on other alternatives, will definitely help you make a wise decision.
Paying off debt takes time but having the right debt consolidation company can help you chop off those debts in a reasonable time frame.
What other pros and cons do you have regarding non profit debt consolidation? Do share your thoughts in the comments section below.
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