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Nonprofit Credit Counselors Can Help When You’re Struggling With Debt

nonprofit credit counselor

Owing money can be overwhelming. Often, people don’t know where to start or how to understand the repayments they must make. It helps if there’s people, such as nonprofit credit counselors, to guide you through the process. It’s important to ensure that you’re working with a company that has your best interests in mind.

Nonprofit Credit Counseling vs. For-Profit Debt Settlement

Many people are tempted by a for-profit debt settlement company’s promises of getting out of debt quickly while paying less. However, these companies may use tactics that can hurt you in the long run.

For-profit debt settlement companies have no educational mission. They try to convince creditors to accept less than the amount owed. Then, they collect that sum plus additional fees from the consumer. It’s risky to go through a for-profit debt settlement company because your creditors may reject their offers and try to collect or sue you.

A nonprofit credit counseling organization can show you options to make repayment easier, and they can serve as a resource as you rebuild your finances. These organizations educate consumers about debt. They charge fees to cover costs, but they don’t make a profit. You can confirm that a credit counseling organization is a nonprofit by checking your state’s online nonprofit registry. Here are some ways a nonprofit credit counselor can help.

Information and Education

Your credit counselor is a good source of information about dealing with debt. Many counselors teach classes and seminars about your options. Even if you don’t use their repayment services, nonprofit credit counselors will still help you by giving advice about your situation or helping you create a budget.

Evaluate Your Situation

Your counselor helps you find a way to repay your debt that’s specific to your situation by looking at your income, expenses, and loans. You work together to create a plan to pay off all your debts over time.

In contrast, debt-settlement companies offer your creditors a smaller lump sum to forgive the rest of the loan. This is not always a good choice for your situation.

Talk to Creditors

Working with a counselor means that your repayment process is smoother and you have less conflict with creditors. Before you begin making payments, your counselor talks to your creditors and asks them to agree not to collect from you while you’re on your payment plan.

For-profit debt settlement companies usually can’t advocate for you like this; in fact, debt settlement companies may encourage you to stop paying your loans altogether. This could prompt your creditors to try to collect or sue you for payment. That’s a stressful position you don’t want to be in.

Negotiate Better Terms

Nonprofit credit counselors can sometimes negotiate better terms for your loans, which makes it easier to pay them off. When your creditors know that you’re working with a counselor, they may agree to give you more time to pay back your loans or a lower interest rate. As a result, you could owe a more manageable payment each month.

For-profit debt settlement companies don’t negotiate better terms for you. Instead, they rely on the hope that a smaller lump payment will be an attractive offer to your creditors.

Create a Plan to Stay Debt-free

Unlike for-profit debt settlement companies, nonprofit credit counselors help you plan to stay out of debt in the future. Your counselor advises you on ways to avoid taking on new debt. She can help you write a budget to keep your expenses lower than your income and to save money so you’re less likely to go back into debt.

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