When going for debt relief programs the consumers have the option of either going for debt consolidation or for debt settlement. There is a considerable difference between the two. There are two kinds of debt consolidation firms - for-profit firms and non-profit firms. How do we find out whether a firm is non-profit or not?
A non-profit debt consolidation firm, just like the for-profit firm, will prepare an income vs. expense chart of your financial situation through a free counseling seminar. Then they will consolidate your multiple debts into a single loan amount. According to the financial condition they will come up with a single monthly payment amount. This amount is at a lower rate of interest and thus easy to pay. The monthly amount will then be properly distributed to their client's creditors. These companies help the consumer by lowering down their interest rates and also by waiving off the late fees, penalties and other hidden charges. A power of attorney has to be made by the debtor to enable the company to talk to his or her creditors on their behalf. The non-profit consolidation companies are dependent mainly on donations, which they receive from various persons and enterprises seeking a tax write-off. Some of these non-profit companies charge a small nominal fee for covering their operating expanses.
But how to find out if a firm is non-profit or not? The information regarding this can be found out on the website of the said companies. The consumer must look for a mention of RS 501(c) (3) non-profit charitable organization status on the website of the interested company. This status is provided by the IRS and companies with this status are having provisions for tax exemption.
Some debt companies dupe the consumers under the guise of being a non-profit debt consolidation firm. Certain precautions must be undertaken to not fall prey to such scams. The consumers are advised to meet the concerned people in person and avoid talks on the phone and internet. All the papers to be signed must be signed in front of a few witnesses. Also do not reveal your financial details over the phone. Both the parties must also sign a document stating that the information will not be revealed without the consent of the consumer. These non-profit consolidation firms make their money from the monthly installments that you pay. Make sure you a keep a check whether the money you pay is being paid only to your creditors and not being used for operating expenses of the firm.
But how to find out if a firm is non-profit or not? The information regarding this can be found out on the website of the said companies. The consumer must look for a mention of RS 501(c) (3) non-profit charitable organization status on the website of the interested company. This status is provided by the IRS and companies with this status are having provisions for tax exemption.
Some debt companies dupe the consumers under the guise of being a non-profit debt consolidation firm. Certain precautions must be undertaken to not fall prey to such scams. The consumers are advised to meet the concerned people in person and avoid talks on the phone and internet. All the papers to be signed must be signed in front of a few witnesses. Also do not reveal your financial details over the phone. Both the parties must also sign a document stating that the information will not be revealed without the consent of the consumer. These non-profit consolidation firms make their money from the monthly installments that you pay. Make sure you a keep a check whether the money you pay is being paid only to your creditors and not being used for operating expenses of the firm.
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