The debt consolidation or non profit program is designed more for someone that is current on their bills and is having a hard time keeping up with their monthly payments due to high interest rates.

One of the main questions that people ask is.... "You're non profit right"? While we do work with a non profit agency for our credit counseling clients, many people have the belief that non profit means it's a free debt consolidation program. Unfortunately there's no such thing. There are no debt consolidation programs that are funded by the government or purely on random donations.

Debt Consolidation companies that provide these programs must charge a fee in order to be able to provide the services of consolidating and to help other people in your situation. The fees vary and are regulated in almost every state through the USA.

Debt settlement (which is always a for profit program) on the other hand you'll actually end up spending a lot less than you would through the debt consolidation plan. Reason is simple, Math! The non profit program you’ll end up repaying your debt in full plus interest, example you have $10,000 in debt, your program length will be about 5 years with a payment of $250 give or take, in total you’ll pay around $15,000. With the same amount of debt in the Debt settlement program you’ll pay approximately $6000 and for the same monthly payment you’d be debt free in 24 months. So you save 3 years worth of time and essentially $9000 dollars back in your pocket.

When is debt settlement the right move? When you need debt relief....

One major thing to keep in mind is that when your settle you debt for less than what you actually owe, this will negatively affect your credit score. Once the debts are paid clearly you can rebuild your credit. However, if you’re planning on purchasing a house in the next two to three years, we do not recommend this program for you.

If you’re already 30+ behind on your payments, debt settlement may very well be your best option. That’s because your credit has already taken a hit, and your interest rates are now at the highest allowed per the contract you signed with the credit card company.

You also need to ask yourself, (other than putting yourself further into debt) what do I really need good credit for over the next 2 to 3 years?

There are few times in your life that you actually need good credit, other than putting yourself into more debt. Some jobs require it, and maybe renting an apartment or buying a home. Purchasing a vehicle, we all know that car dealers are willing to wheel and deal, but if you’re score is bad you’ll just have a higher interest rate than normal.

Point is, learn to save cash up for those things that you’d normally purchase with your credit cards. Get yourself into a debt consolidation plan as soon as you can and wipe out that debt, once you complete the program, you’ll actually have extra cash each month that you use to save up to purchase things that you want.

 

 

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