3 Reasons to Choose Non-Profit Credit Counseling Services

Non-profit credit counseling services are not free credit counseling services. You will still have to pay in order to work with one, and you will still see some downsides, like a lower credit score, after you have gone through settlement or negotiation. There is no way around these things. However, with a non-profit service, you may find the penalties and downsides are lower than if you chose a similar private, for-profit service.

#1 Lower Fees

The first benefit you may find with non-profit services is lower fees. Non-profit companies cannot net a profit at the end of the year; this means they will have less incentive to charge a large markup. The fees you pay must directly contribute to paying for the services rendered to you in some way. The agent will still earn a salary for working with you, but the salary may be lower than a similar for-profit agent's salary. Similarly, the company may still charge you a premium, but this premium will go only toward maintaining their building, paying rent, updating computers and other necessary expenses. You can be assured the salary is not going to lavish corporate bonuses.

#2 More Disclosure

A non-profit company receives unique benefits from the federal government. These benefits include, foremost, exemption from some tax obligations. In order to continue to receive these exemptions, a non-profit company must disclose items like earnings from year-to-year, salaries, expenditures and other dollar-by-dollar breakdowns of how they run their business. This information is public knowledge, so you can actually look it up online. Even though you will have to pay a fee, you can at least know exactly how this fee is used in the operation of the company. You can be assured this fee is in line with fees offered to other clients. You may even learn how the company sets this fee. Having this information provides you with invaluable peace of mind as you move forward working with the lender.

#3 Federal Regulations

Aside from publishing and mandating disclosures, the government will also set other requirements in order for a non-profit lender to achieve its non-profit status. For example, there will be caps on salaries and bonuses as deemed fit by the government. There will also be caps on how fees are handled. Some for-profit services will require a fee up front just to become a "member" of their organization. This fee will never be charged by a non-profit lender. Instead, the fee structure will be very clear from the beginning. You will know exactly what it will cost, and the cost will be regulated by federal authorities. If you believe the lender violated any of these regulations, you can report the lender to the government in order to have the charges dismissed. The credit counselor is aware that it could lose its non-profit status by violating the regulations, so this threat of reporting is always prevalent, steering a counselor away from any potential misdeed.

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