Non-Profit Debt Settlement-Does it mean for free?

There are many questions and misunderstandings concerning non-profit debt settlement companies. The process is really quite simple and when used properly can save a consumer thousands of dollars. When someone is faced with an enormous amount of consumer debt including a mortgage, automobiles, student loans, retail cards and credit cards, it can often times feel as though your debt is growing faster than the payments are being made. There are countless companies who claim to be able to help eliminate or reduce consumer debt for just pennies on the dollar. A number of questions will no doubt arise as one researches debt settlement companies.

A few of the most basic questions are: Are these companies legit? How do they work? Why are some of these listed as non-profit? Does non-profit mean for free?

Well, unfortunately, nothing worthwhile is ever free. However, there are a number of benefits to using a debt settlement company. First, a consumer needs to know how these companies operate. Think of a consumer debt elimination company as an attorney. As a matter of fact, the first thing they are going to do is have you sign over your power of attorney to them. This is so they can legally speak to your creditors and negotiate on your behalf. They act as a negotiator, plain and simple.

Please be aware that like with anything involving money, there are people out there looking to scam people out of their hard earned money. This can be easily avoided by contacting the Better Business Bureau or your states Attorney General's Office and obtaining a list of reputable companies.

Once you have chosen a debt settlement company and signed their power of attorney agreement, you will begin making regular monthly payments to them instead of your creditors. Once the company you work with contacts your creditors, it's illegal for them to call you for a payment. Your debt settlement company does have expenses. What they will do is take a small portion of your monthly payment for their efforts and "bank" the lions share into your account. They will let this build until they can negotiate a lump-sum payment to settle your account with one of your creditors. This will eliminate your bill in some cases 50-85% of what you actually owe the bank. They will then repeat the process working with creditor after creditor until your debt is eliminated.