Frequently Asked Questions on Debt Help
Written by Gloria Zhu   


Are there any free ways to receive professional help?

If you have already spent too much money already and need help getting out of debt, why pay more for advising? Nonprofits get most of their funding from creditors so you do not have to pay them.

However, you will have to be wary. The way these agencies earn non-profit status is by filing the property tax papers, not because they are federally sanctioned or endorsed. This non-profit status does not prevent them from making a lot of money and paying the owners and directors huge salaries so when the end of the year tax audit comes there is "no profit". In fact, almost all of the funding for these "non-profit" agencies comes from creditors, meaning if the agencies want to be funded next year they better have a creditor bias.

A good non-profit agency should make sure these things happen:
  1. The creditors will stop hounding you.
  2. You will most likely make just one payment to the agency; they will break up the funds, making things easier
  3. Sometimes they will negotiate interest so that it is lowered or eliminated.
  4. Minimum payments can be lowered to make things affordable and stretch your repayment time frame.
  5. Chapter 7 bankruptcy or chapter 13 bankruptcies can be avoided.
  6. They will negotiate with the creditors for you, avoiding the sometimes nasty or confrontational collectors.
  7. If you complete all program payments your credit card debt will be gone.
Although privacy is usually not an issue, you should still check the agency’s policy to ensure that they won't sell your information.

Why do debt help companies fail to help their customers so often?

This is because customers often fail to realize the nature of these companies. They are not designed to magically make your debt disappear, but to either provide you with a repayment plan or help reduce your debt. However, it is still up to the debtor to either stick to the plan or repay the reduced amount. As the repayment plans are often very strict, debtors- who already have a track record of being careless about spending- often fail to follow them.

Remember: debt help is not a solution to your debt problem, but a tool to help you do so.



 
Last Updated on Friday, 24 December 2010 07:10