Non Profit Debt Consolidation - The Misconception

Debt consolidation is actually taking every debt a person has choked up with, and then consolidates it into a single payment. Interest rates of monthly payments are usually lower. There are some non-profit debt consolidation organizations which are set up to help people in need. For those who are unable to finish paying their debts and have trouble with their debts can approach these non-profit debt consolidation organizations.
These companies are able to help a person combine all his/her debts into a single entity and then pay it to their creditors on monthly basis. Debts which these organizations can consolidate include credit card debts, student loan debts, home mortgage loans and various other debts/loans which a debtor has incurred.

Many people hold a common misconception about non-profit debt consolidation organizations. They often think that the federal or state government controls such companies in order to help debtors complete paying their debts easily. However, acquiring a non-profit status is not a very hard thing to do. Debt consolidation companies can acquire them by declaring as much in property tax returns. In actual fact, some of these companies make quite a sum. They would then use this money to pay their staffs. And by doing this, they would be able to maintain their non-profit status because they have no profits to show. Debtors also need to exercise a lot of caution when dealing with non-profit debt consolidation organization. Some of the companies do engage in fraudulent activities. The monthly payment which debtors pay might be retained by some of them. Hence, this will result in the great dip of credit score of the debtor. Some might even use these payments to rotate into other mortgages and end up making late payments. In such cases, the debtors' credit score might be entirely tarnished because of such uncouth practices practiced by these companies.

Though there are some non-profit debt consolidation companies which have engaged in fraudulent activities, there are still some genuine ones out there. These genuine companies exist and they do provide great service for all the clients who uses their services. These genuine non-profit debt consolidation companies will help clients negotiate with their creditors. And then they will ask the creditors to lower the interest rate. Also, they might ask for a repayment program that would ease the debtors' financial status. And most importantly, debtors need not have to deal directly with their creditors.

Every payment will be made through the non-profit debt consolidation company. Therefore, the company acts like a third party between the debtors and the creditors. Since the payments are made easier (thanks to the debt consolidation companies), it is much easier for debtors to finish paying all his debts. If everything goes well, debtors will be able to finish paying all his/her debts within 2-5 years. And after that, if good credit habits are practiced, the debtors' credit score will definitely rise again. In extreme cases where there are large amount of money involved, bankruptcy might be avoided if debtors seek early help from these companies.