Non profit debt consolidation agencies - be careful
There are times that no matter how careful you are you just can't avoid being in a bad credit situation. When the economy is as sluggish as it has been lately, there are more and more people finding themselves struggling financially and their credit score dropping. When it becomes a real struggle to pay all your monthly debt payments, you may want to start thinking about some sort of debt consolidation. Before you start looking at consolidation agencies you need to be aware that there are both profit and non profit agencies.
Non profit debt consolidation is different than the traditional debt consolidation loan. Actually, whether it is a profit or non profit agency, a debt consolidation agency, also known as credit counseling agency, do not give out loans at all. These agencies don't work in the way a traditional debt consolidation loan works by giving you one large loan to cover all your debts. You don't necessarily need to consolidate all your debts into one big loan, there are other consolidation options that are often much better for your situation. A debt consolidation loan is just another loan and can still impact your credit score in a negative way if you don't keep on top of it.
So how do debt consolidation agencies help you? Let's take a look at what they can do for you.
Instead of giving you a loan, a debt consolidation agency will negotiate, on your behalf, with the companies that you owe money to. Because they are a company that specializes in this area they are able to get lower interest rates, they are often able to have your fees reduced or removed altogether and they may even be able to get a reduction the total debt that you owe. When they have finished negotiating with all of your creditors they will then calculate the total amount of debt you have and how much your monthly payment will be to cover these debts. Then you will send this payment to the debt consolidation agency each month and they will distribute it between your creditors. The advantage is that you still only have one payment each month, making it easier to keep track of everything, and because you are not taking out a new loan it doesn't affect your credit score at all.
Debt consolidation agencies are a great way to get your debt under control. They take a lot of the stress out of the process by helping you get better deals on your debts and also handling it all for you, but you do still need to understand what they are doing with your payments. Both profit and non profit debt consolidation agencies will collect some fee for their service but generally the non profit agencies will have a much lower fee than the profit agencies. Either way, both companies will usually add the fee into the monthly payment that you give them so you don't need to worry about it.
A debt consolidation company will go through all the details with you and explain exactly how your payment will be allocated each month. If they don't explain it to you then you should ask them to and if they refuse to explain the details then you should try another agency. This is your money and you have every right to know how it is being handled and you should know how it is being handled so you can keep track of your payments and your debts. A good consolidation company will also give you some sort of financial budget or plan to help you manage your money so that you can afford to pay this monthly payment to your creditors. Not only will they help you to pay off your debts and become financially secure but they will also help you to avoid getting into a similar situation in the future.
TAGS: non profit debt consolidation agencies
Article Source: Messaggiamo.Com
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