What is debt consolidation
You can find many debt consolidation non profit agencies out there to help people to face their worst financial situations. By hearing the word non profit agency many people think like these agencies will provide their service at free of cost. It’s not true. They will charge you bit for getting their assistance. They will negotiate with your creditors on your interest rates and make them to cut so many unnecessary charges like over the limit fee on you.
This kind of negotiations makes a way for a revised payment plan. It will be designed depending on your income and other financial situations. Generally this revised payment plan is one of part of Debt management programs.
Free one to one discussion
Debt consolidation non profit companies will offer a free one to one session. In this initial meet the counselor will review your financial status and debts you owe. They will give you some guidance to prepare an income expense sheet to plan your budget in a smart way. Based on your income flow and other resources your counselor will tell you how much money you can allocate for loan repayment every month. Apart from this your counselor will take steps to negotiate with your creditor and reduces your interest rates. As a result your loan repayment term will be extended. They will make sure whether you have sufficient amount of money left with your hand to meet your daily expenses.
If your creditor agrees with the revised plan you can see a mark decrease in your interest rates.
Benefits of debt consolidation non profit
These companies have an ultimate aim to reduce your monthly debt repayment amount as an affordable one so that you can avoid the further debt. To keep you away from further debts in the future they will devise you a perfect budget plan and will freeze your credit cards until you become okay with your debt situation. They will talk with your creditor and skip out the late payment fee, high interest rates and annual membership fee. When these fees are getting eliminated from you, obviously your monthly debt repayment amount will be reduced.
Your counselor will see whether you need to enroll yourself with the Debt management programs or you can just pay off your debt by making some alterations to your spending behavior.
They will educate the clients on what is debt consolidation and how it can help them to reduce their burden of debt.
Debt management programs
In debt management programs your counselor will consolidate your 2 or more debts into one. So instead of paying 2 or more debts with the high interest paying credit card you can make a single payment at some low interest rate as they negotiated. When you make this single payment your counselor will separate it and sent it to the several different creditors.
Generally your debt consolidation collector itself will handle all the collection calls & communications just for you.
Many chances are there for the non profit debt consolidation agencies to scam the innocent consumers. As with all other concerns, you should be very careful while reading their terms and conditions. It is good to inquire with your family members and friends about the non profit debt consolidation companies. You can find the user views and rating at the better business bureau. Check out this information before sign up with any non profit and Debt consolidation programs.