With thousands of companies jockeying for your business, it can be daunting to pick one. We'll go over a few things to keep in mind when you're investigating non-profit debt consolidation services.
Many consolidators say they're non-profit, but actually make profits in the millions. Companies use the "non-profit" label to lure people into thinking they have customers' best interests in mind. Other companies use their non-profit status to violate telemarketing laws from which charitable organizations are exempt [source: Federal Trade Commission]. Ask for proof of non-profit (501(c)(3)) status before doing business with an agency.
Some companies use religious affiliations in their names or on their Web sites. Some services do have genuine relationships with a religion, but some companies are just using the name so that you will be more willing to trust them. Don't let a religious affiliation sway your choice -- choose the service that is right for you.
Fees: Not all non-profits are free, but true non-profits should have minimum set-up and monthly fees. Some agencies advertise voluntary fees, but then force you to pay the full fee, even if it's too expensive for you. If a service has high fees, is vague about their fees, or forces you to pay a so-called voluntary fee beyond your means, go to a different agency. And be aware that with many agencies, the first month's payment will likely go to the debt consolidation firm -- not your creditors.
It took time to get into debt, and it will take time to get out of debt. Don't trust an agency that promises you will be debt-free in months. Likewise, make sure the debt consolidation firm spends its time on you. The National Foundation for Credit Counseling, a non-profit community organization, spends an hour, in person or on the phone, on a consultation to decide if you need consolidation [source: Dunleavey]. If a firm gives you a plan in a short amount of time, they have not spent enough time reviewing your expenses. Use an agency that spends a significant amount of time examining your finances.
Better Business Bureau (BBB): The Better Business Bureau uses a Reliability Report to keep records on businesses so consumers can choose the most trustworthy companies. The BBB maintains information on products and services, along with a record of complaints and compliments [source: Better Business Bureau]. Companies receive a satisfactory or unsatisfactory record based on how they handle customer issues. Before you decide on a company, check the BBB and only choose a firm with a satisfactory rating.
It can seem overwhelming to pick a non-profit debt consolidation firm with so many choices out there. But with a little patience and a lot of research, you can pick one that's right for you -- making you one of those smiling, debt-free people.
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Sources
- Better Business Bureau. "Check Out a Business or Charity." http://us.bbb.org/WWWRoot/SitePage.aspx?site=113&id=0549fde2-bc14-4256-9a10-5765e419bcba (Accessed 5/7/08)
- Chatzky, Jean. "Should I trust credit-counseling agencies?" MSNBC. 8/20/08. http://www.msnbc.msn.com/id/5772061/ (Accessed 5/7/08)
- Dunleavey, MP. "Your 3 worst debt consolidation moves." MSNmoney. http://moneycentral.msn.com/content/savinganddebt/managedebt/p36230.asp (Accessed 5/7/08)
- DebtHelp. "Debt Consolidation Loan." http://www.debthelp.com/debt-consolidation/loan.html (Accessed 5/7/08)
- Federal Trade Commission. "National Debt Consolidation Scheme Misleads Consumers About Costs, Benefits, and Nonprofit Status, FTC Says." 1/8/07. http://www.ftc.gov/opa/2007/01/expresscon.shtm (Accessed 5/7/08).
- Newsweek. "Debt Consolidation: Beware Big Fees And Big Promises." 1/3/02. http://www.newsweek.com/id/63248/page/1 (Accessed 5/7/08)
- Welsh, Kristy. "Are Non-Profit Debt Consolidation Companies the Saviors They Seem?" Credit Infocenter. http://www.creditinfocenter.com/pressreleases/DebtConsol.shtml (Accessed 5/7/08)
