Non-profit debt consolidation can come in handy. Finding a non-profit debt consolidation company who is really a non-profit agency, can be more trouble than you at first think. You can find a good consumer credit counseling service and ask them if they are a non-profit debt consolidation company. A non-profit debt consolidation company usually will give you their consumer credit counseling service for a small fee or maybe no fee at all. That's how you know a consumer credit counseling service is truly a non-profit debt consolidation company. Keep reading and you will find out more ways to differentiate from a non-profit debt consolidation company and a fake. You can get free debt consolidation help and find out more.

Is It Really A Non-Profit Debt Consolidation Company?

All non-profit debt consolidation companies must have a Federal 501-C3 non-profit status form on file. However the consumer should never use this filing as the only qualification to act in accordance with a true non-profit debt consolidation company. Many so called non-profit debt consolidation company managers advertise this status to the unweary consumer but are as non-profit as Don King.

For example, a legitimate non-profit debt consolidation company will not retain a first payment but are paid a "fair share distribution" (around 10%) by the creditors plus about $5 - $20 per debt monthly from the client. At times this contribution is negotiable with a non-profit debt consolidation company.

However, many so called non-profit debt consolidation companies in addition to a high per debt fee per month will also charge a one time fee equal to a first month's payment on all debts considered. Additionally, as seen below, the total of the debts considered are inflated because they include bills which should not be included. Not only is it inflated but the lure is that this fee is a "retainer" paid back to the client when the program is successfully completed. The sad fact is, these groups know that only a small percent who go to these groups ever finish their program and, as seen below, for good reason. Therefore these managers keep the "retainer"... a very lucrative practice for a "non-profit debt consolidation" company.

In hardship cases where it is necessary to try to lower the interest rate for the client, there is no difference from what one debt manager can do versus another because all lower rates are preset by individual creditors and not established by debt managers. Additionally not all debts should be listed because many are non-negotiable. For example, student loans, payments to I.R.S., selected Credit Union loans, many department store accounts, foreign creditors, and many others cannot be negotiated. Needless to say a less than scrupulous "non-profit debt consolidation" company wants these items included because it inflates the retainer or first payment which a true non-profit debt consolidation company would not be taking in the first place. At a later time the "fake" non-profit debt consolidation company would then inform the client that the creditor has since changed policy and nothing can be done. Of course, this "pseudo" non-profit debt consolidation company will keep the retainer anyway because they can't be held responsible for a "change of the creditor's policy".

Another common problem with these types of firms is with their customer service once the client is on board. With so many clients they can't keep up with the follow up that is required. For example, when a proposal to lower an interest rate is sent out in one legitimate agency I know, it follows up in 21 days because they know that 30% of all proposals are lost by the creditors themselves. If this happens with one legitimate organization, it probably happens to most companies since they are all going to the same creditors. Each proposal must be initiated, followed up, often re-initiated, followed up,.... Proposals can take up to 6 months to actually get all of the accounts accepted. Most quasi non-profit debt consolidation companies don't mind it taking even longer because it is a greater incentive for the client to drop out and thus loose their retainer. Thus proper follow-up by many "so called" non-profit debt consolidation companies is minimum at best and often non-existent.

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