Consumer Credit Counseling Programs

December 19th, 2009 | Posted in Bankruptcy, Debt Reduction, Debt Relief

One question that comes up often when talking about debt relief and debt settlement is consumer credit counseling programs. The idea of credit counseling is often misconstrued, misunderstood, and mistrusted for all of the wrong reasons. From that, we wanted to take some time to talk about credit counseling.

In this article we will cover what consumer credit counseling is, the various forms it may take, and we’ll help you to get rid of some misconceptions you may have had about credit counseling in general.

Consumer Credit Counseling – Definition and History

The first thing we need to cover is what consumer credit counseling is. In general it is a process offering education to consumers about how to avoid incurring debts that cannot be repaid.

The process itself actually entails more than educations, and usually credit counseling often involves negotiating with creditors to establish settlements on existing debts. The concept of credit counseling was established in the 1980’s as was proposed created as an alternative to bankruptcy for consumers who could not meet their monthly obligations.

In the early 1990’s credit counseling began to get a bad rap in the U.S. At the time credit counseling agencies were springing up all over the place, and some of them actually worked more for creditors rather than consumers.  This led to an antitrust lawsuit against the National Foundation for Credit Counseling, or NFCC, and the need for better legislation led to some of the associations that manage debt negotiations today. It also led the FTC (Federal Trade Commission) to file lawsuits against several credit counseling agencies.

This bad reputation is what makes some people cringe at the thought of credit counseling today. However the reputation is mostly undeserved. Â In the world of consumer credit counseling today, the various associations that regulate debt negotiations have led to better debt settlement agencies.

Consumer Credit Counseling Programs

Consumer credit counseling programs provide a viable, and better, alternative to bankruptcy. But, and yes there is a but, the FTC still recommends that you research the company who you use for credit counseling services.

This is actually one of the reasons why we started this site, and why we take the time to share information with you on debt relief. Our reviews of the top three debt relief companies, provide you with three companies that can help you choose the right consumer credit counseling program, and who will work for you to get the best results possible (and relieve your debts faster).

Debt Consolidation Not For Profit?

November 6th, 2009 | Posted in Debt Consolidation, Debt Relief

From our contact page the other day we were asked if we could recommend a nonprofit debt consolidation company. The short answer to the question is that there is no such thing as debt consolidation not for profit.

Of course there are companies out there that might call themselves non-profit debt relief companies. These companies may offer a range of services from consolidation loans to debt settlement, or even bankruptcy services. The problem is that they may call themselves non-profit companies, but most likely you’re being misled.

When it comes to debt consolidation specifically there are really two types of companies out there. There are those who lend you their own money and those who borrow money from others and relend it to you. In either case there is interest charged on the supposed nonprofit consolidation loan that you take out, and fees are usually charged for acquiring the loan itself. Herein, of course, lays the problem.

The consolidation company calls itself non-profit, but they still collect interest on the loan, and they do profit from that interest. In many cases they pay out huge salaries to the directors of the company so that can maintain their non-profit status.

The qualifications to become a nonprofit organization in the US aren’t really that strict. Basically all you need to do to get nonprofit status is create a company that doesn’t specifically earn money (it was created as a corporation, but not intended to profit as a corporation). That’s not to say that they can’t spend a huge amount of money on expenses.

In other words, the term nonprofit, when it refers to debt companies is usually just a marketing gimmick. Â The same can be said about nonprofit debt negotiators, and most other offshoots in the debt industry. Â The companies are still going to earn money for their services; they just hide that money by paying it out to someone else.

Debt Consolidation Not For Profit – A Better Solution

With a brief look at what debt consolidation not for profit really means (not much at all), it’s time to talk about a better solution. Since your goal of a consolidation loan, or a debt relief program, is to get out of debt – a much better option to being misled by a company who calls themselves nonprofit is to find an experienced debt relief company. On the front page of our site you’ll find consumer-backed reviews of the top three debt relief companies in the US.