Non Profit Debt Relief

Are Non Profit Debt Management Plans Any Good?

If you are having difficulties with paying your bills or keeping track of your debts, you might deliberate on using a non profit debt management service to avoid charges. However, just because a debt management service is non profit does not necessarily mean that it is free or less expensive than a for profit debt service.

Debt Management Plans or DMP, are services offered by credit counseling agencies. Regardless of whether they are non profit or for profit, debt relief agencies have many differences in quality and practices. Please continue reading for the lowdown on credit counseling companies and DMP.

If a credit counseling agency is an honest one they will review your finances, help you to create a budget, and do everything they can think of to get you out of debt before they suggest a Debt Management Plan.

After exhausting all other options for your debt repayment by reducing expenses and finding additional income, your advisor may recommend that you enroll in a Debt Management Plan. Registering for a DMP means that your advisor will negotiate with your creditors to lower monthly payments and maybe even interest rates.

Please keep the following in mind about DMP whether you used a nonprofit or for profit company:

  • Any secured debts are typically not included in the settlement, for example car loans, home equity loans, and mortgages.
  • Creditors may inform the credit bureaus that you are paying them through a DMP which, in turn, might damage your credit.
  • Confirm with your advisor every month that your creditors have been paid.
  • Read your monthly statements to ensure that your account has been credited accurately.
  • Sometimes not all of your creditors will agree to participate in the DMP; in this case enrolling in the plan will probably not be of much benefit to you.
  • Your credit cards may not be used while you are enrolled in the program.
  • You cannot send a smaller payment than that which is owed even if an unexpected expense arises and as a result many people end up dropping out of the program.
  • Ask to see the IRS approval of nonprofit status document of any debt counseling company claiming to be nonprofit.

Obviously, even if you employ the help of a debt counseling service you are still responsible for keeping track of your own finances. One common problem that clients of debt relief companies have is that the company will sometimes send payments to the creditors late or skip them altogether. The result is a debt balance increase for the client due to late fees.

In conclusion, a debt management company can really give you a step up if it is a legitimate, honest, and reputable one, whether non profit or for profit. Please be sure, however, to do some research and ask questions to try to avoid being scammed and ending up with a much larger debt problem.