Non-Profit Debt Settlements

Non-profit debt settlement is a valuable option for those looking to significantly reduce their borrowed balances. If finding oneself knee-deep in financial bondage with no clear plan of escape, or avoiding answering the phone for fear it might be a collection agency pursing a default loan, then non-profit debt settlements can work to make a debt-free future a reality.

Several financial services companies can help settle one's debt. However, the fees charged by some groups can outweigh the benefits of their service. In general, non-profit debt settlement companies offer account balance reduction services for a smaller fee. Because non-profit debt settlements still have to pay employees and cover business operating expenses, their services are not free. However, since they do not have to generate a profit for shareholders or owners, their fees tend to be less.

As opposed to other debt management strategies such as loan consolidation, these agreements actually reduce the total principal balances, not just the interest charges. A non-profit debt settlement company will work with most creditors to reduce the amount owed to them significantly. After enrolling with a counseling or management plan, qualified financial specialists will contact the creditors and indicate that they are now representing the borrower. From this point on, creditors should deal with the non-profit debt settlements agents instead of harassing the borrower. "When a man's ways please the Lord, he maketh even his enemies to be at peace with him" (Proverbs 16:7).

As part of the enrollment, the borrower begins making monthly payments to the service instead of the creditors. Using these accumulating funds, qualified agents contact the creditors to get them to agree to a repayment of up to 50-70% of what is owed on the original balance. Once a figure has been mutually agreed upon by the borrower and their creditor, the monthly payments to the non-profit debt settlement are used to pay off the reduced balances. By repeating this process with all outstanding balances, the end result is a much smaller amount owed.

Working with a non-profit service can enable one to clear their indebtedness in a relatively short amount of time. However, the immediate effect upon a credit history will be negative. The negotiations process between the agents and the creditors can take quite some time. All the while, the creditor is reporting that no payments have been made. Until all the balances have been settled and cleared, the borrower's credit rating will suffer; however, paying off the balances will certainly rehabilitate the personal credit in the long run. For many people, working with non-profit debt settlements groups has provided the path they had long been looking for.

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