While the debt keeps piling up at a steady rate, many people struggle to get out of this situation. Non-profit debt relief companies are advertised everywhere these days starting from televisions, radios to the internet. Some of these commercials sound too good to be true, but people struggling with debt appreciate all the help they can get to come out of this mess. While some of the companies are legitimate a customer must be cautious while choosing a debt relief company.
A non profit company does not necessarily mean that that it is going to help you out for free. These companies also have a working cost they will take a minimal charge from you. Before they enroll you into their program they will want to do a thorough check on your current financials. They will either request you to meet them in person or will ask you to fill out an online form which will need all your financial details including your social security number. This is required so that they can check up your credit report and your current debt status.
Two popular services that these companies offer are debt settlement with the creditors and the consolidation of the debt. A consumer must understand that these methods do have a negative impact on your credit rating.
Through debt settlement program, the company tries to get a maximum reduction in the total amount that needs to be paid. Sometimes this reduction can be as high as 60 % of the total debt amount. A customer needs to make a down payment to the creditor to settle the account.
Through debt consolidation, the company helps the customer to take a new loan with a lower rate of interest for a longer period of time to pay off all other loans.
Debt settlement is a legitimate alternative to filing bankruptcy. If consumers are experiencing a financial hardship and have at least $10k in unsecured debt then debt settlement can be a legitimate way to eliminate up to 70% of that balance.
