Unemployment, reduced wages, and excessive debt can contribute to a person’s desperate search for debt relief. Unfortunately, most people don’t know where to turn.

An increased number of debt settlement scams have frightened even the most trusting people. Knowing where to look and what to expect will decrease scam victims. Knowledge goes a long way.

Why Do I Need Debt Counseling?

Some may already realize they need to seek debt counseling, but others are unaware of the benefits.

When a creditor calls repeatedly and demands payment, debt settlement can help stop these annoying phone calls. Debt counseling can help the borrower with credit card debt consolidation as well. If the borrower cannot afford the current monthly payment on all credit cards, he or she will benefit from debt counseling.

The debt settlement company can combine all credit card debt into one low monthly payment. Most debt counseling companies charge a fee, but unlike profit debt settlement companies, non profit companies offer low rates or sometimes free services.

How to Find a Non Profit Debt Consolidation Company

All non profit companies must be registered with the Federal Trade Commission.

Some debt consolidation companies may claim to be non profit, but you can look up their status with the FTC or Better Business Bureau. Don’t do business with a non profit debt consolidation company that demands high fees for their services.

Many non profits will help consolidate debt for free.

Look for reputable companies or ones that are affiliated with a religious organization.

Be sure to always research any debt counseling company before signing up for their services.

Debt reduction takes time to achieve, so be aware of companies that promise to ‘get out of debt’ in an unrealistic amount of time.

How Can Debt Counseling Services Help Someone Get Out of Debt?

A reputable non profit debt consolidation company has debt solutions that can help anyone with debt reduction.

Services usually include consolidating all debt into one monthly payment.

These companies work with creditors to reduce the total debt owed, which reduces the monthly payment. They can also eliminate any late fees or reduce interest rates by negotiating with creditors. While anyone can try to negotiate fees or interest rates with creditors, debt settlement companies are more effective than the average person.

Using Non Profit Debt Consolidation To Eliminate Debt

Eliminate debt the easy way by taking advantage of non profit debt consolidation services. One call to a debt agency can save someone the headache of calling and arguing with creditors. Debt solutions are easier and more convenient than ever thanks to the Internet. Just be sure to research any debt settlement company to avoid scams.

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These promises are incredibly inviting offers to those in our society most suffering under the burden of unemployment and staggering debt.  Unfortunately, many of those caught in this trap are left deeper in debt, without legitimate alternatives and nowhere to turn for help.

Do not let this be you!!!  If you are considering using debt consolidators to consolidate loans, watch out for these traps and pitfalls.

The Bad Credit Loan

Credit card consolidation loans (the good ones) are not easy to get.  This is because you probably need a debt reduction loan because you have missed a few payments on your credit cards and your credit score has taken a major hit.

If you are a credit risk, the debt consolidator will promise easy debt settlement, and you with a bad credit loan and paying high interest rates (higher than you are paying now).  Even though your monthly payment is lower, you will pay more interest over a longer period of time.

Debt Consolidators Will Take Care of Everything

The credit consolidation company promises to make your life easier by negotiating lower interest rates and payments.  You need only make one easy monthly payment.

Look For High Hidden Fees. In reality, many debt consolidators charge a fee as a portion of the payment you make.  This fee is usually around 10%. They forward the payments to the creditors and get an additional 10% to 15% from the creditor as well.  Is it really worth paying someone else to negotiate lower interest rates, stretch out your repayment schedule and pay off the highest-interest debts first?

They Might Make Late Payments. Another trick used by debt consolidators to separate you from more of your money is to negligently or intentionally make late payments.  The creditor charges a late fee, thereby increasing the balance.  The debt consolidator then stretches the repayment out over a greater period of time and charges you more months of processing fees.

Balance Transfers Can Be A Trap

Even though 0 interest credit card offers are still commonplace, those rates only last a few months.  If you want to continue paying low interest, you have to switch cards and pay another balance transfer fee.  I admit that I used to use these balance transfers for business debt consolidation.

There are two pitfalls to using balance transfers.

First of all, you have to have a good credit score to qualify.  Second, remember that each time you conduct a balance transfer for credit consolidation, the activity shows up on your credit report.  If you are unable to transfer the balance at the end of the initial term, you could be left with a high interest credit card and a large balance.

Just because you have made a few bad credit moves does not mean that you have to continue down that same path. Avoid quick fixes to your credit problems.  If you get into trouble, in most cases you can call the creditor and negotiate a better repayment plan, avoid unnecessary fees as well as the balance transfer trap.  You can do anything that a debt consolidator can do.

After all, I think it was Paul Harvey who once said that:

“No man can become debt free by making another loan.”

I agree.

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